I think instead of taxing "the estate" (and doesn't that name tell us something?), the government should tax the recipient on unearned income. The problem is, any "reform" so far utilised tax lawyers, and they just put in loopholes that they can exploit for profit.
For the past 40 years, taxes in the UK have moved from wealth to income and sales, which allow the very wealthy to offshore their assets and leave ordinary people with the tax burden. Unfortunately, no-one is going to deal with that.
What really annoys me (which you touch on) is the idea that this is generational. It will indeed affect young workers, but not those with wealthy parents. It's just another way to prevent class solidarity.
the claim that a deceased’s estate has been bought with taxed income is no reason not to tax it on death
firstly frequently it has not been bought with taxed income at all : the value of many assets has soared without the owner either doing anything or being taxed ( ie primary residence)
secondly the source of many tax receipts is money which has been taxed at numerous stages ( ie when an income tax payer buys a vat able item )
these sort of comments seem to come from the instinct of some people’ who seem to object to paying tax at all : even tho they frequently want to live in a country where everything works and the hoi poloi pay plenty of tax ( france germany switzerland etc)
This is greatly exaggerated by accountants. More and more people are paying IHT since it was frozen at £325,000. It brings in £7 bn a year and it is rising by £1bn every year as more people become liable. People say houses are exempt but that isnt true. I had to pay IHT on my
mother’s house when she died. As for pensions: if you have an annuity it dies with you. I don’t think it’s unfair for spouses to benefit from partner’s pensions - many home makers don’t have any pensions of their own. It should be a simple matter to close down evasion by trust - though again I don’t think it is wrong, for example, to donate to charities as a way of reducing inheritance tax or donating art works. That is not evasion but a different way of paying. It’s another myth that you can avoid IHT by making gifts. The point is that people do understand IHT and pay it. Better then creating a new wealth tax with all the anomalies that involves.
It’s not unearned income though, is it, Iain? It’s income that has already been taxed and is being left as a gift to the next generation. If/when they invest it they’ll pay tax on the income from it, and do it goes on. It’s an insidious tax that many people who certainly can’t be described as ‘rich’ have to pay, while the very rich spend a lot of money avoiding it.
As I said, it’s a gift for the recipient from taxed money, which then goes on to attract tax when invested. The lump sum or assets passed on should be tax free because they were bought with taxed income.
The beneficiary inherits the lump sum then has to do something with it. Investments produce benefits which in turn attract tax. It’s really very simple. Inheritance tax on the aristocracy led to the loss of many of our great estates and houses.
The Panama papers and the Paradise papers very much proved that the wealthy do NOT invest their money anywhere that meant they had to pay tax.
Inheritance tax is one reason some estates were broken up. Another reason they couldn't maintain them was because they were finally having to pay their staff decent wages ; their ancestors had already thrown their agricultural workers off the land; and many of them simply gambled and drank their wealth away. And look at the monarch. We pay the royal family millions of pounds every year, and apparently they haven't used any of that money for the upkeep of Buckingham Palace, which they now expect the taxpayer to cough up for. As, I seem to remember, did Jacob Rees-Mogg.
You have to think this through, Elizabeth. The logic of your argument is that only workers should have to pay tax, and those who inherit wealth should not. That surely cannot be what you mean?
And as someone whose ancestors were agricultural labourers in Ireland until the famine drove them to the slums in Glasgow, I confess my withers are unwrung if the homes of those who benefited from their exploitation don't belong to them any more.
We’re not talking about the super-rich though. I have no issue if they have to pay an additional tax other than that they’d employ people to ensure they avoid it.
I’m talking about people who leave a house and some other assets to their descendants that just happen to be worth over the £1 million mark and are hit with 40% tax. That’s iniquitous.
I and my husband started with nothing, inherited nothing and have worked hard for what we have, as have many others. We have five grandchildren and I want to leave them money for their futures which I have no doubt they’ll use wisely to further their education or to buy property. The first will benefit the country, the second attract LBTT. I can’t think of anything worse than giving almost half of it to the incompetent government we have in charge in Scotland.
I think instead of taxing "the estate" (and doesn't that name tell us something?), the government should tax the recipient on unearned income. The problem is, any "reform" so far utilised tax lawyers, and they just put in loopholes that they can exploit for profit.
For the past 40 years, taxes in the UK have moved from wealth to income and sales, which allow the very wealthy to offshore their assets and leave ordinary people with the tax burden. Unfortunately, no-one is going to deal with that.
What really annoys me (which you touch on) is the idea that this is generational. It will indeed affect young workers, but not those with wealthy parents. It's just another way to prevent class solidarity.
the claim that a deceased’s estate has been bought with taxed income is no reason not to tax it on death
firstly frequently it has not been bought with taxed income at all : the value of many assets has soared without the owner either doing anything or being taxed ( ie primary residence)
secondly the source of many tax receipts is money which has been taxed at numerous stages ( ie when an income tax payer buys a vat able item )
these sort of comments seem to come from the instinct of some people’ who seem to object to paying tax at all : even tho they frequently want to live in a country where everything works and the hoi poloi pay plenty of tax ( france germany switzerland etc)
absolutely agree !!
worth also observing however that the rich you are the greater your opportunities are to avoid inheritance tax
certain gifts ,pension funds and trusts all not taxed
This is greatly exaggerated by accountants. More and more people are paying IHT since it was frozen at £325,000. It brings in £7 bn a year and it is rising by £1bn every year as more people become liable. People say houses are exempt but that isnt true. I had to pay IHT on my
mother’s house when she died. As for pensions: if you have an annuity it dies with you. I don’t think it’s unfair for spouses to benefit from partner’s pensions - many home makers don’t have any pensions of their own. It should be a simple matter to close down evasion by trust - though again I don’t think it is wrong, for example, to donate to charities as a way of reducing inheritance tax or donating art works. That is not evasion but a different way of paying. It’s another myth that you can avoid IHT by making gifts. The point is that people do understand IHT and pay it. Better then creating a new wealth tax with all the anomalies that involves.
It’s not unearned income though, is it, Iain? It’s income that has already been taxed and is being left as a gift to the next generation. If/when they invest it they’ll pay tax on the income from it, and do it goes on. It’s an insidious tax that many people who certainly can’t be described as ‘rich’ have to pay, while the very rich spend a lot of money avoiding it.
It isn't earned by the recipient, which is what counts, though.
As I said, it’s a gift for the recipient from taxed money, which then goes on to attract tax when invested. The lump sum or assets passed on should be tax free because they were bought with taxed income.
Not by the beneficiary. You are arguing that inherited wealth should never be taxed. That's exactly how the aristocracy held onto their wealth.
The beneficiary inherits the lump sum then has to do something with it. Investments produce benefits which in turn attract tax. It’s really very simple. Inheritance tax on the aristocracy led to the loss of many of our great estates and houses.
The Panama papers and the Paradise papers very much proved that the wealthy do NOT invest their money anywhere that meant they had to pay tax.
Inheritance tax is one reason some estates were broken up. Another reason they couldn't maintain them was because they were finally having to pay their staff decent wages ; their ancestors had already thrown their agricultural workers off the land; and many of them simply gambled and drank their wealth away. And look at the monarch. We pay the royal family millions of pounds every year, and apparently they haven't used any of that money for the upkeep of Buckingham Palace, which they now expect the taxpayer to cough up for. As, I seem to remember, did Jacob Rees-Mogg.
You have to think this through, Elizabeth. The logic of your argument is that only workers should have to pay tax, and those who inherit wealth should not. That surely cannot be what you mean?
And as someone whose ancestors were agricultural labourers in Ireland until the famine drove them to the slums in Glasgow, I confess my withers are unwrung if the homes of those who benefited from their exploitation don't belong to them any more.
We’re not talking about the super-rich though. I have no issue if they have to pay an additional tax other than that they’d employ people to ensure they avoid it.
I’m talking about people who leave a house and some other assets to their descendants that just happen to be worth over the £1 million mark and are hit with 40% tax. That’s iniquitous.
I and my husband started with nothing, inherited nothing and have worked hard for what we have, as have many others. We have five grandchildren and I want to leave them money for their futures which I have no doubt they’ll use wisely to further their education or to buy property. The first will benefit the country, the second attract LBTT. I can’t think of anything worse than giving almost half of it to the incompetent government we have in charge in Scotland.