If you join the LibDems in a forest...

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Comments

  • rjsterry
    rjsterry Posts: 27,594
    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    No, the inherited house *is* the 'income' (edit: should be capital. Thanks DB). The future sale can still be tax free if it's then the main residence.
    As you can't really tax a dead person, any tax falls on the estate. So applying the principles that a main residence is exempt from tax, then that gives you the answer.

    Agree that any subsequent sale by the beneficiaries should be driven by whether it is their main residence or not. Although as I mentioned above, it doesn't necessarily have the desired outcome for HMRC :smile:
    I think we are muddling what actually happens now versus what KG or TBB had suggested. While it's great to inherit, if you were starting from scratch, I don't think you would differentiate between gifts received from whoever and what are essentially gifts received via inheritance. On the other hand I think the taxing of estates (beyond settling up the affairs of the deceased) is something that should carry over into this hypothetical tax system.
    Maybe some think it is a good idea but it's very hard to police in practice, other than for stuff which is formally recorded like property ownership.
    I see I have missed a critical word 'not' from that last sentence 😂. Meant to say that I think it's better to just tax people's income (and other gains) than taxing estates.

    Looking at the history of IHT and previous versions of estate tax, it seems to be used as a repeated patch for holes in government finances (from assorted wars). And then of course they have come to rely on it. Why that much money is accumulating in estates is probably one for another thread
    1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
    Pinnacle Monzonite

    Part of the anti-growth coalition
  • TheBigBean
    TheBigBean Posts: 20,551

    Any thoughts on what the Lib dems suggested? As it had same rules in life and death, you should like it.

    It read a bit as anti-rich which I don't think is helpful. I'm happy for people to have big pensions and also happy for there to be no tax free special bit for all.
  • briantrumpet
    briantrumpet Posts: 17,828

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    Agree the use of the term income here is incorrect and unhelpful. Primarily, you receive capital from an estate. (Though underlying investments may generate some income whilst the estate is settled.)

    Stevo - on death, the property of the deceased become a second property for the beneficiaries of the estate and it taxed in the same way as any other second property.

    Likewise, if you tried to give away your main home to your beneficiaries whilst alive, it is a PET (Potentially Exempt Transfer) and will remain inside your estate for at least 7 years, and you have to pay a market rent if you continue to live there.
    DB, I know - I have been through this with my own inheritance. The taxability of the inherited house as a second property worked the other way as the probate valuation was a bit on the high side and I generated a capital loss which I've used to shelter some gains in the last year.

    The market rent point is anti-avoidance really. There is a way to mitigate the IHT cost if the house is jointly owned and also avoids the market rent requirement. It also helps if one person dies and the other goes into care.
    Don't confuse husband & wife owning as tenants in common alone, with adding in a child as owner and third tenant. The H&W would still need to pay a market rent for the share they have given away, or it's a Gift with Reservation and still inside their estate.
    Different if the child has purchased their share at a fair market price though.
    I'm not, this is something different which you may be already aware of. What I'm referring to is the set up where you have tenants in common, both of them will their half of the house to the kids and when one dies then the kids get half the house but there is no obligation to pay market rent.

    It also has the advantage that if the surviving spouse needs to go into care, when the council come knocking for fees, they only own half a house and not a whole one.

    Worked well me. Less so on the IHT side as the estate value wasn't that large, but if my old dear had survived a few more years in care it would have saved me a six figure sum.
    Actually that isn't what happens. A debt equal to the deceased's share is created against the survivor, and that debt is repayable on death of the survivor. However, there is the possibility of losing the RNRB.

    Fight, fight!!

    Not that I understand a single technicality of this (that'll come as no surprise to @Stevo_666 ), but it's still fun having two experts on the case.

  • TheBigBean
    TheBigBean Posts: 20,551

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    Agree the use of the term income here is incorrect and unhelpful. Primarily, you receive capital from an estate. (Though underlying investments may generate some income whilst the estate is settled.)

    Stevo - on death, the property of the deceased become a second property for the beneficiaries of the estate and it taxed in the same way as any other second property.

    Likewise, if you tried to give away your main home to your beneficiaries whilst alive, it is a PET (Potentially Exempt Transfer) and will remain inside your estate for at least 7 years, and you have to pay a market rent if you continue to live there.
    DB, I know - I have been through this with my own inheritance. The taxability of the inherited house as a second property worked the other way as the probate valuation was a bit on the high side and I generated a capital loss which I've used to shelter some gains in the last year.

    The market rent point is anti-avoidance really. There is a way to mitigate the IHT cost if the house is jointly owned and also avoids the market rent requirement. It also helps if one person dies and the other goes into care.
    Don't confuse husband & wife owning as tenants in common alone, with adding in a child as owner and third tenant. The H&W would still need to pay a market rent for the share they have given away, or it's a Gift with Reservation and still inside their estate.
    Different if the child has purchased their share at a fair market price though.
    I'm not, this is something different which you may be already aware of. What I'm referring to is the set up where you have tenants in common, both of them will their half of the house to the kids and when one dies then the kids get half the house but there is no obligation to pay market rent.

    It also has the advantage that if the surviving spouse needs to go into care, when the council come knocking for fees, they only own half a house and not a whole one.

    Worked well me. Less so on the IHT side as the estate value wasn't that large, but if my old dear had survived a few more years in care it would have saved me a six figure sum.
    Actually that isn't what happens. A debt equal to the deceased's share is created against the survivor, and that debt is repayable on death of the survivor. However, there is the possibility of losing the RNRB.

    Fight, fight!!

    Not that I understand a single technicality of this (that'll come as no surprise to @Stevo_666 ), but it's still fun having two experts on the case.

    I think this is Dorset Boy's area of expertise.
  • briantrumpet
    briantrumpet Posts: 17,828

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    Agree the use of the term income here is incorrect and unhelpful. Primarily, you receive capital from an estate. (Though underlying investments may generate some income whilst the estate is settled.)

    Stevo - on death, the property of the deceased become a second property for the beneficiaries of the estate and it taxed in the same way as any other second property.

    Likewise, if you tried to give away your main home to your beneficiaries whilst alive, it is a PET (Potentially Exempt Transfer) and will remain inside your estate for at least 7 years, and you have to pay a market rent if you continue to live there.
    DB, I know - I have been through this with my own inheritance. The taxability of the inherited house as a second property worked the other way as the probate valuation was a bit on the high side and I generated a capital loss which I've used to shelter some gains in the last year.

    The market rent point is anti-avoidance really. There is a way to mitigate the IHT cost if the house is jointly owned and also avoids the market rent requirement. It also helps if one person dies and the other goes into care.
    Don't confuse husband & wife owning as tenants in common alone, with adding in a child as owner and third tenant. The H&W would still need to pay a market rent for the share they have given away, or it's a Gift with Reservation and still inside their estate.
    Different if the child has purchased their share at a fair market price though.
    I'm not, this is something different which you may be already aware of. What I'm referring to is the set up where you have tenants in common, both of them will their half of the house to the kids and when one dies then the kids get half the house but there is no obligation to pay market rent.

    It also has the advantage that if the surviving spouse needs to go into care, when the council come knocking for fees, they only own half a house and not a whole one.

    Worked well me. Less so on the IHT side as the estate value wasn't that large, but if my old dear had survived a few more years in care it would have saved me a six figure sum.
    Actually that isn't what happens. A debt equal to the deceased's share is created against the survivor, and that debt is repayable on death of the survivor. However, there is the possibility of losing the RNRB.

    Fight, fight!!

    Not that I understand a single technicality of this (that'll come as no surprise to @Stevo_666 ), but it's still fun having two experts on the case.

    I think this is Dorset Boy's area of expertise.

    It sounds like it, but then anyone who talks about the offside rule in football sounds like a football expert to me, such is my level of ignorance.
  • A reply:



    They only want to keep the Waitrose - sounds pretty libdem. The rest can be labs.
  • Jezyboy
    Jezyboy Posts: 2,894
    I mean, to be fair local food shops are key to minimizing car journeys no?

  • Stevo_666
    Stevo_666 Posts: 58,383
    edited February 2023

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    Agree the use of the term income here is incorrect and unhelpful. Primarily, you receive capital from an estate. (Though underlying investments may generate some income whilst the estate is settled.)

    Stevo - on death, the property of the deceased become a second property for the beneficiaries of the estate and it taxed in the same way as any other second property.

    Likewise, if you tried to give away your main home to your beneficiaries whilst alive, it is a PET (Potentially Exempt Transfer) and will remain inside your estate for at least 7 years, and you have to pay a market rent if you continue to live there.
    DB, I know - I have been through this with my own inheritance. The taxability of the inherited house as a second property worked the other way as the probate valuation was a bit on the high side and I generated a capital loss which I've used to shelter some gains in the last year.

    The market rent point is anti-avoidance really. There is a way to mitigate the IHT cost if the house is jointly owned and also avoids the market rent requirement. It also helps if one person dies and the other goes into care.
    Don't confuse husband & wife owning as tenants in common alone, with adding in a child as owner and third tenant. The H&W would still need to pay a market rent for the share they have given away, or it's a Gift with Reservation and still inside their estate.
    Different if the child has purchased their share at a fair market price though.
    I'm not, this is something different which you may be already aware of. What I'm referring to is the set up where you have tenants in common, both of them will their half of the house to the kids and when one dies then the kids get half the house but there is no obligation to pay market rent.

    It also has the advantage that if the surviving spouse needs to go into care, when the council come knocking for fees, they only own half a house and not a whole one.

    Worked well me. Less so on the IHT side as the estate value wasn't that large, but if my old dear had survived a few more years in care it would have saved me a six figure sum.
    Actually that isn't what happens. A debt equal to the deceased's share is created against the survivor, and that debt is repayable on death of the survivor. However, there is the possibility of losing the RNRB.
    Interesting as that was never mentioned by the solicitors who advised on the set up, or the tax expert in my network that I consulted about it and confirmed that there is no need for the survivor to pay a market rate of rent in that situation to avoid a tax charge.

    How would a debt be created for the survivor when the will of the deceased passes their half of the property to one of the children? The survivor isn't party to that transaction (I.e. transfer of the half of the property that was owned by the deceased to the child).

    Btw RNRB was never relevant in my case as the amounts were way below that.

    There must be something in the law or HMRC statements of practice about this - got a link?
    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]
  • Stevo_666
    Stevo_666 Posts: 58,383
    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    No, the inherited house *is* the 'income' (edit: should be capital. Thanks DB). The future sale can still be tax free if it's then the main residence.
    As you can't really tax a dead person, any tax falls on the estate. So applying the principles that a main residence is exempt from tax, then that gives you the answer.

    Agree that any subsequent sale by the beneficiaries should be driven by whether it is their main residence or not. Although as I mentioned above, it doesn't necessarily have the desired outcome for HMRC :smile:
    I think we are muddling what actually happens now versus what KG or TBB had suggested. While it's great to inherit, if you were starting from scratch, I don't think you would differentiate between gifts received from whoever and what are essentially gifts received via inheritance. On the other hand I think the taxing of estates (beyond settling up the affairs of the deceased) is something that should carry over into this hypothetical tax system.
    Maybe some think it is a good idea but it's very hard to police in practice, other than for stuff which is formally recorded like property ownership.
    I see I have missed a critical word 'not' from that last sentence 😂. Meant to say that I think it's better to just tax people's income (and other gains) than taxing estates.

    Looking at the history of IHT and previous versions of estate tax, it seems to be used as a repeated patch for holes in government finances (from assorted wars). And then of course they have come to rely on it. Why that much money is accumulating in estates is probably one for another thread
    Ah, OK. Fair enough, although clearly depends on how much you want to tax via those routes, as for some people, whatever is being paid is never enough. As long as its other people who are paying, usually...
    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]
  • Stevo_666
    Stevo_666 Posts: 58,383

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    Agree the use of the term income here is incorrect and unhelpful. Primarily, you receive capital from an estate. (Though underlying investments may generate some income whilst the estate is settled.)

    Stevo - on death, the property of the deceased become a second property for the beneficiaries of the estate and it taxed in the same way as any other second property.

    Likewise, if you tried to give away your main home to your beneficiaries whilst alive, it is a PET (Potentially Exempt Transfer) and will remain inside your estate for at least 7 years, and you have to pay a market rent if you continue to live there.
    DB, I know - I have been through this with my own inheritance. The taxability of the inherited house as a second property worked the other way as the probate valuation was a bit on the high side and I generated a capital loss which I've used to shelter some gains in the last year.

    The market rent point is anti-avoidance really. There is a way to mitigate the IHT cost if the house is jointly owned and also avoids the market rent requirement. It also helps if one person dies and the other goes into care.
    Don't confuse husband & wife owning as tenants in common alone, with adding in a child as owner and third tenant. The H&W would still need to pay a market rent for the share they have given away, or it's a Gift with Reservation and still inside their estate.
    Different if the child has purchased their share at a fair market price though.
    I'm not, this is something different which you may be already aware of. What I'm referring to is the set up where you have tenants in common, both of them will their half of the house to the kids and when one dies then the kids get half the house but there is no obligation to pay market rent.

    It also has the advantage that if the surviving spouse needs to go into care, when the council come knocking for fees, they only own half a house and not a whole one.

    Worked well me. Less so on the IHT side as the estate value wasn't that large, but if my old dear had survived a few more years in care it would have saved me a six figure sum.
    Actually that isn't what happens. A debt equal to the deceased's share is created against the survivor, and that debt is repayable on death of the survivor. However, there is the possibility of losing the RNRB.

    Fight, fight!!

    Not that I understand a single technicality of this (that'll come as no surprise to @Stevo_666 ), but it's still fun having two experts on the case.

    Actually it's quite interesting, but I don't think our areas of expertise overlap completely. I await DB's reply...
    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]
  • briantrumpet
    briantrumpet Posts: 17,828
    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    Agree the use of the term income here is incorrect and unhelpful. Primarily, you receive capital from an estate. (Though underlying investments may generate some income whilst the estate is settled.)

    Stevo - on death, the property of the deceased become a second property for the beneficiaries of the estate and it taxed in the same way as any other second property.

    Likewise, if you tried to give away your main home to your beneficiaries whilst alive, it is a PET (Potentially Exempt Transfer) and will remain inside your estate for at least 7 years, and you have to pay a market rent if you continue to live there.
    DB, I know - I have been through this with my own inheritance. The taxability of the inherited house as a second property worked the other way as the probate valuation was a bit on the high side and I generated a capital loss which I've used to shelter some gains in the last year.

    The market rent point is anti-avoidance really. There is a way to mitigate the IHT cost if the house is jointly owned and also avoids the market rent requirement. It also helps if one person dies and the other goes into care.
    Don't confuse husband & wife owning as tenants in common alone, with adding in a child as owner and third tenant. The H&W would still need to pay a market rent for the share they have given away, or it's a Gift with Reservation and still inside their estate.
    Different if the child has purchased their share at a fair market price though.
    I'm not, this is something different which you may be already aware of. What I'm referring to is the set up where you have tenants in common, both of them will their half of the house to the kids and when one dies then the kids get half the house but there is no obligation to pay market rent.

    It also has the advantage that if the surviving spouse needs to go into care, when the council come knocking for fees, they only own half a house and not a whole one.

    Worked well me. Less so on the IHT side as the estate value wasn't that large, but if my old dear had survived a few more years in care it would have saved me a six figure sum.
    Actually that isn't what happens. A debt equal to the deceased's share is created against the survivor, and that debt is repayable on death of the survivor. However, there is the possibility of losing the RNRB.

    Fight, fight!!

    Not that I understand a single technicality of this (that'll come as no surprise to @Stevo_666 ), but it's still fun having two experts on the case.

    Actually it's quite interesting, but I don't think our areas of expertise overlap completely. I await DB's reply...
    That's why I'm finding it quite interesting. I equally enjoy academics discussing subjects that I've got a vague interest in, even if I'm nowhere near their level of understanding. It's even more fun when one, politely and logically, tries to dismantle the entire life's work of another.

  • Stevo_666
    Stevo_666 Posts: 58,383

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    Agree the use of the term income here is incorrect and unhelpful. Primarily, you receive capital from an estate. (Though underlying investments may generate some income whilst the estate is settled.)

    Stevo - on death, the property of the deceased become a second property for the beneficiaries of the estate and it taxed in the same way as any other second property.

    Likewise, if you tried to give away your main home to your beneficiaries whilst alive, it is a PET (Potentially Exempt Transfer) and will remain inside your estate for at least 7 years, and you have to pay a market rent if you continue to live there.
    DB, I know - I have been through this with my own inheritance. The taxability of the inherited house as a second property worked the other way as the probate valuation was a bit on the high side and I generated a capital loss which I've used to shelter some gains in the last year.

    The market rent point is anti-avoidance really. There is a way to mitigate the IHT cost if the house is jointly owned and also avoids the market rent requirement. It also helps if one person dies and the other goes into care.
    Don't confuse husband & wife owning as tenants in common alone, with adding in a child as owner and third tenant. The H&W would still need to pay a market rent for the share they have given away, or it's a Gift with Reservation and still inside their estate.
    Different if the child has purchased their share at a fair market price though.
    I'm not, this is something different which you may be already aware of. What I'm referring to is the set up where you have tenants in common, both of them will their half of the house to the kids and when one dies then the kids get half the house but there is no obligation to pay market rent.

    It also has the advantage that if the surviving spouse needs to go into care, when the council come knocking for fees, they only own half a house and not a whole one.

    Worked well me. Less so on the IHT side as the estate value wasn't that large, but if my old dear had survived a few more years in care it would have saved me a six figure sum.
    Actually that isn't what happens. A debt equal to the deceased's share is created against the survivor, and that debt is repayable on death of the survivor. However, there is the possibility of losing the RNRB.

    Fight, fight!!

    Not that I understand a single technicality of this (that'll come as no surprise to @Stevo_666 ), but it's still fun having two experts on the case.

    Actually it's quite interesting, but I don't think our areas of expertise overlap completely. I await DB's reply...
    That's why I'm finding it quite interesting. I equally enjoy academics discussing subjects that I've got a vague interest in, even if I'm nowhere near their level of understanding. It's even more fun when one, politely and logically, tries to dismantle the entire life's work of another.

    Not sure that IHT or personal tax stuff is my life's work, and similarly not sure what DBs life work is, but we may about to find out. We will do our best to entertain you...
    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]
  • Stevo_666
    Stevo_666 Posts: 58,383

    Stevo_666 said:

    Stevo_666 said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Stevo_666 said:

    rjsterry said:

    Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

    I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.
    Don't think anyone was suggesting changing the effective rate.
    So what are you suggesting?
    I didn't suggest anything. I think TBB has suggested widening the scope of IHT. I asked why (hypothetically) income in the form of property from the estate of a deceased person should be treated differently from other unearned income. In most cases that won't be the primary residence of the inheritor. In other words, I'm not sure inheritance is/should be different from other gifts. The limitations on gifts a few years prior to death seem to already acknowledge that they are kind of the same thing.
    That's fine - given that income from the sale of a house is unearned income*, then the point that it should not be treated differently from that of a living person is not unreasonable. So given that when a living person sells their main residence it is tax free, why should it be different for the estate of the deceased?

    (* Technically its a capital gain not income but that might be splitting hairs :smile: )
    Agree the use of the term income here is incorrect and unhelpful. Primarily, you receive capital from an estate. (Though underlying investments may generate some income whilst the estate is settled.)

    Stevo - on death, the property of the deceased become a second property for the beneficiaries of the estate and it taxed in the same way as any other second property.

    Likewise, if you tried to give away your main home to your beneficiaries whilst alive, it is a PET (Potentially Exempt Transfer) and will remain inside your estate for at least 7 years, and you have to pay a market rent if you continue to live there.
    DB, I know - I have been through this with my own inheritance. The taxability of the inherited house as a second property worked the other way as the probate valuation was a bit on the high side and I generated a capital loss which I've used to shelter some gains in the last year.

    The market rent point is anti-avoidance really. There is a way to mitigate the IHT cost if the house is jointly owned and also avoids the market rent requirement. It also helps if one person dies and the other goes into care.
    Don't confuse husband & wife owning as tenants in common alone, with adding in a child as owner and third tenant. The H&W would still need to pay a market rent for the share they have given away, or it's a Gift with Reservation and still inside their estate.
    Different if the child has purchased their share at a fair market price though.
    I'm not, this is something different which you may be already aware of. What I'm referring to is the set up where you have tenants in common, both of them will their half of the house to the kids and when one dies then the kids get half the house but there is no obligation to pay market rent.

    It also has the advantage that if the surviving spouse needs to go into care, when the council come knocking for fees, they only own half a house and not a whole one.

    Worked well me. Less so on the IHT side as the estate value wasn't that large, but if my old dear had survived a few more years in care it would have saved me a six figure sum.
    Actually that isn't what happens. A debt equal to the deceased's share is created against the survivor, and that debt is repayable on death of the survivor. However, there is the possibility of losing the RNRB.

    Fight, fight!!

    Not that I understand a single technicality of this (that'll come as no surprise to @Stevo_666 ), but it's still fun having two experts on the case.

    I think this is Dorset Boy's area of expertise.

    It sounds like it, but then anyone who talks about the offside rule in football sounds like a football expert to me, such is my level of ignorance.
    It's is sometimes said that an expert in a subject is someone who knows 1% more about it than anyone else.
    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]
  • Dorset_Boy
    Dorset_Boy Posts: 6,915
    To clarify, Stevo, you are saying that the parental property was owned as tenants in common. On death of first parent, their share passed directly to one of their children. The surviving parent continues to live in the property but the child doesn't.
    Is that correct?

    If so, I cannot see how HMRC would allow the surving parent to benefit from the part of the property they don't own without paying a market rent for that share.

    Normally, in such cirtcumstances, to avoid any doubt with HMRC, an IOU (ie debt) is created against the survivor's estate, repayable on the death of the survivor. Control of the property remains with the survivor, and the debt can be proportional to the prevailing property value. It's the old Nil Rate Band type trust that was used before the transferable nil rate band was introduced.

    There have been lots of schemes conjoured up by solicitors over the years around trying to avoid IHT on the family home, but as is often the case, the solicitor knows sweet FA about the financial impacts of IHT planning (0r any other financial planning or the restrictions on them giving financial advice)!

  • Stevo_666
    Stevo_666 Posts: 58,383
    edited February 2023

    To clarify, Stevo, you are saying that the parental property was owned as tenants in common. On death of first parent, their share passed directly to one of their children. The surviving parent continues to live in the property but the child doesn't.
    Is that correct?

    If so, I cannot see how HMRC would allow the surving parent to benefit from the part of the property they don't own without paying a market rent for that share.

    Normally, in such cirtcumstances, to avoid any doubt with HMRC, an IOU (ie debt) is created against the survivor's estate, repayable on the death of the survivor. Control of the property remains with the survivor, and the debt can be proportional to the prevailing property value. It's the old Nil Rate Band type trust that was used before the transferable nil rate band was introduced.

    There have been lots of schemes conjoured up by solicitors over the years around trying to avoid IHT on the family home, but as is often the case, the solicitor knows sweet FA about the financial impacts of IHT planning (0r any other financial planning or the restrictions on them giving financial advice)!

    Your first para re: assumptions is correct, although I don't think it makes any difference whether the child lives in the house or not after inheriting. If you look at the 'before and after' situation though, while they were both alive the (now) survivor owned half the house and lived in the house [with no obligation to pay rent for the half they don't own]: after their other half died, they still own half the house and live in the house. the only thing that has changed is who owns the other half, so where does the rent obligation come from?

    The survivor never owned more than half of the house, which is the case for tenant in common. The other half belonged to the deceased which passed direct to the child. Explain to me how a debt can be created in that case against the survivors estate in relation to something they never owned.

    Could it be that you are thinking of this in terms of a lifetime gift - which it is not as this only happens when one of the two tenants in common dies?

    You say that you can't see how that can be but that sounds like an assumption TBH. As mentioned, if the position of HMRC was as you see it, there would be at least guidelines on it or published rules. I can't see any: can you?

    Agree that solicitors generally can't give tax advice, which is why I mentioned that I asked someone who is a tax professional covering that area and they confirmed the tax point. This isn't a one off, it's a reasonably well known and accepted arrangement which dates back some time (nearly 20 years in my case). After my Father died I made HMRC aware of inheriting half of my folks house while my Mother was still alive (and owned the other half) and no issue was raised.
    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]
  • rjsterry
    rjsterry Posts: 27,594

    That ITV interview with Ed Davey was excruciating. I think he's a fair way down a pretty crowded list of people who have some responsibility for the Horizon scandal but he managed to make it seem like it was all his idea.

    1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
    Pinnacle Monzonite

    Part of the anti-growth coalition
  • rick_chasey
    rick_chasey Posts: 72,517

    He’s pretty sh!t. I’m unlikely to vote for them which is a bad sign.

  • Pross
    Pross Posts: 40,435

    It feels like a perfect time for the third party to make a move and gain popularity but it's like they've disappeared off the face of the earth. I suppose their biggest issue is a lot of people will just want rid of the Tories and see Labour as the only option so won't risk voting Lib Dem even if were getting their message out.

  • rick_chasey
    rick_chasey Posts: 72,517

    My hope is they pick up some "anyone-but-Tory" seats and then hopefully there will be a bigger pool of talent to choose a better leader from.

  • Pross
    Pross Posts: 40,435

    Yeah, the voting intention map on the other thread seems to suggest that will be the case although a new MP becoming Party leader feels like it would be unusual. They used to have some fairly heavyweight politicians amongst a small number of MPs.

  • rjsterry
    rjsterry Posts: 27,594

    Yes, they would effectively have Surrey and Dorset, which sounds mad.

    1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
    Pinnacle Monzonite

    Part of the anti-growth coalition
  • I think they need to replace Ed Davey with someone who has a personality.

  • veronese68
    veronese68 Posts: 27,289

    I saw him in one of my local pubs late last year, didn't have the slightest inclination to talk to him.

    I'll probably vote for them, it's a 2 horse race in the Richmond Park constituency and I really don't want a Conservative. Sarah Olney doesn't seem to have been too bad, not that I pay her much heed.

  • briantrumpet
    briantrumpet Posts: 17,828


    I think that'll probably be the only feasible option in East Devon to get rid of the incumbent Tory, but I'll do whatever needs to be done, even if it's a tub of lard standing for the Lardy Cake Party.

  • Stevo_666
    Stevo_666 Posts: 58,383

    Could be a challenge - the last (and possibly only) Lib Dem leader that I can remember with a bit of charisma was Paddy Pantsdown.

    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]
  • briantrumpet
    briantrumpet Posts: 17,828


    They've been like Mr Cellophane since Brexit, and have not missed an opportunity to miss the limelight.

    That said, they get a raw deal from MSM including the BBC who seem to prefer to showcase Farridge and the unelected Tufton Street Gang at every possible opportunity while denying the LibDems and other less polarising politicians the chance to air their views. Question Time alone is a prime example of that.


  • Stevo_666
    Stevo_666 Posts: 58,383

    Well it's not often you get someone accusing the BBC of effectively showing right wing bias. Mind you, he is an academic... :)

    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]