Inheritance Tax

[jazzactivist]

What do you think about Inheritance Tax? I recently read that should the Conservative Party win the next UK General Election they will do away with IH, and even the Labour Party are talking about a re-jig of the current arrangements. However, I can't see what is wrong with paying tax on a sudden windfall eg inheriting a house when your parents die and then selling it for monetary gain, or inheriting their savings. The argument against it seems to be that people have already paid tax on the income that they earned to pay for their house or save their money, so it means double taxation. However, the people inheriting it haven't paid that tax, and are basically just getting extra income. To me, it would seem sensible to tax inheritance in the same way as any other earned income - 22% up to £38000pa and 40% for any amount more than that. What do you think about it as grandparents and parents who may plan to leave all your worldly goods to your family, or who may have inherited a house / savings from your relatives?

[dragonfly]

I'm against inheritance tax, for ordinary people, for as you say I have already paid tax on anything I own so why should my children have to pay again. We have worked hard all our lives and it is nice to think you can make life easier for children and grandchildren. I think if you have millions to leave then that is a different matter and some tax should be paid on it.

[eleanor2]

i do think the value of the inheritance shuld be highered.as house prices are a lot higher than when the price for inheritance tax was set.say if you inherit a family cottage that goes back generations.that is very run down.but is detached and has land.imagine having to sell it just because you just come in the inheritance tax bracket.just as much as 30 years ago this cottage would be worth very little.so the poor family have always managed to stay there.but now detached cottages with land have shot up in price.even tho it is quite rundown .so i say a reshuffle is needed.the tax bracket needs to go up quite a bit.if ordinary people are to be able to keep thier families home.

[jazzactivist]

I think that is exactly why inheritance should be taxed though, eleanor, as properties are worth so much more today and someone who earns an average living can suddenly become very wealthy just through inheriting an old cottage in a high price area. Whether people sell their own house to move into the old cottage to keep it in the family, or sell the old cottage to be able to afford a larger house in a better area they are still making a big wodge of money as part of their income that year.

[eleanor2]

but they wont be rich jazz.they will be going into a run down cottage.that will take every penny they own just to bring it upto modern standards.then they will obviously be passing it on to their children.i dont think inheritance tax should be there to rob the poor of a little rundown cottage. i think it should be about the wealthy giving a small percentage of their wealth. i mean in reality some of the weathly have hundreds of thousands in shares and savings .just sitting there.then they inherit lots more wealth.there has to be more definition to protect to the poor.
in France they are very strict about inheritance.every child has to have an equal share of the inheritance.even children who are illigitamate and not living with the family.there is a clause that you can pay a certain amount at any stage in your childrens life and sign over a property to them.then this property will not come into the inheritance tax bracket.the fee is only a few thousand euros too.any money of cause will then come into inheritance tax brackets when the parents die.

[jazzactivist]

I agree with you that wealthy people should pay a lot more tax than people who are poor eleanor, but you could say that the children in a family should contribute towards helping to maintain the cottage while their parents / grandparents are alive, so that it isn't in such poor shape for them or afterwards. I don't think that there are many people who have home-ownership in their family who are too poor to maintain their houses. Poor people don't own houses they live in social housing for generations. There is always the 'break point' though where some people living in Council houses can be better off than some people who own their own. I think that everyone who inherits a share of a property should contribute to its upkeep, and pay tax if they sell it.

The French system of equal shares of any inheritance sounds like a good one, as it stops the haggling and bad feelings that can happen in the UK. I think that there is a clause in the UK where people can hand over property to their children / grandchildren before they die and avoid inheritance tax too, but then they have to pay tax on any income exchanged during the transfer that takes them over tax-free savings limit. Also, if they have given their property away to avoid paying for elderly care their children can still be expected to pay for it.

I don't like people trying to avoid paying their taxes, as that is what pays for our free healthcare, schooling etc. It seems natural that the more you earn, from any source, the more you should pay in tax. Quite a few people suddenly become quite wealthy through inheriting a house that costs next to nothing in today's terms in what is now a very expensive area, and are immediately £200000 - £300000 or more better off. There is no way that they should get that money for free without giving some to the State to benefit themselves and others.

There was an open problem in the Guardian a few weeks ago where someone was saying that a young man that they knew was about to give up his university course as he couldn't afford to continue with it and was in lots of debt. The person knew that when his dad died he had left an inheritance for his son, but his mother had spent it on paying off her mortgage and the boy didn't know about it. The writer was asking if he should tell the young man about it, and whether his mother should now be expected to pay it back to her son. The same thing happened to me when my dad died. He died Intestate without a will and in SA at that time it meant that 1/3 immediately went to the State and the rest was divided 1/2 to the surviving spouse and the rest divided between his children - just two of us that we knew of then. However, my mum had power of attorney and used that to spend my share of the inheritance. There was no redress for me, as she was within the law to do it. What do you think of this situation with parents having access to their children's inheritance?

[dragonfly]

Jazz I think it is wrong for parents to spend a childs inheritance unless it is something essential for the child. It sounds like stealing to me.

I don't think it is always possible for children to help with the upkeep on a parents property for most have enough with the upkeep on their own property and parents often don't want help from their children.

[eleanor2]

the thing is if you pay and have the hard work of renovating old parents home.that then pushes the price up and you get taxed even more for your labours.most old people dont want the hassle either.to me it seems like the thing that happens a lot.if you work hard to own something you get taxed for it.i agree with taxes.but i also think the inheritance tax bracketneeds to be highered.people who own houses arnt necesarily wealthy .especially if it is a family home.if you own your own home you get no help with anything.for old age pensioners it can be quite a strain.
i dont think parents should have any access to childrens inheritance this is in my eyes stealing.i dont know how a parent could do it.
but the thing about sharing the inheritance equally between all children.well i dont actually agree with it fully.what if one child is the one looking after old parents.doing all the work of looking after parents and property.it can be very demanding having sole responsibility for aged parents who dont even want to leave the house at all.then say theres other children living miles away.who do nothing.how awful that parents cant decide who they want to leave thier inheritance too.it does seem to work in France at the moment.because they are still very family orientated.where the whole family pull together.yet here in G.B the trend seems to be to move away for jobs etc.the nuclear family dispersing.so you can have one child doing everything and another child miles away doing absolutely nothing.

[franbee]

That's why you have a will, eee, so that property can be left to whoever you like, just one of your children if you prefer.
The whole thing is so difficult, between the 'haves' and the 'have nots'. If you do have any savings, you need them to work for you as you don't get any sort of top-up to your earnings or pension. You can own a house, but have nothing else but a pension, so can't afford to live well. You can pay NI contributions for 40 years to earn a full pension, but still can't afford to live on it if your employer has taken pension contributions off you and you get a few pounds extra each week. Yet people who have made little or no contribution to the exchequer can get a full pension and full top up. No wonder people grumble.

[dragonfly]

That is one of my grumbles franbee. I know people who haven't worked most of their adult life but have a full pension. My friend has worked most of her life and paid for a private pension but because she had a £4 rise in the national pension they took £12 from her private pension so she is worse off than if she didn't have the rise. How does this make you want to put money into a private pension.

[franbee]

I think that's because the tax allowance is different to begin with, so you do pay more tax on your combined income.

[cindy]

I agree Franbee, we have worked and saved all our lives but because of OH's private pension he loses his age related allowance so is now taxed at 40%. We would have been better off spending our money and letting the state support us now. We have made wills leaving all we have to our children and I don't see why they should pay tax on it as we have already been taxed up to the hilt on our income

[eleanor2]

fran i am on about the way France law says you have to leave your inheritance equally between all your children.

[franbee]

Exactly, ee, so in this country if one of your children has looked after you and the others haven't, you can leave everything in your will to the one child, which I think is very fair and your choice.

[eleanor2]

yes fran and isnt it a better way of doing things.

[Katelb]

I agree with you Cindy,taxing people twice on their pensions is quite enough without introducing a third round as inheritance tax. We would find it difficult to help the family out financially if it became necessary at this stage ,so I sincerely hope that there will not be any further tax on what is inherited after our day.

[jazzactivist]

I don't agree with inheritance anyway, as I think that each person should support themselves and earn their own money and not rely on others for it. Many older people in the UK don't spend money on themselves or sell their home and move into a smaller more suitable one and spend the money on their own care and enjoying life, as they are saving it for their children to inherit. To me, it makes more sense for elderly people to make sure that the rest of their own lives are comfortable than keeping something to pass on. This is why we have poverty-stricken elderly people living in large houses that they can't afford to heat properly or care for, when they would be better off renting a small, one-bedroom, warden supported flat and spend the winters on cruises or in warmer countries, or at least buying in lots of personal care and good food.

I think that the French system is better, as it ensures that all of the children take a role in caring for their parents / grandparents. My Turkish friend told me that in Turkey they have a very unusual system for caring for female elderly parents / grandparents, which is becoming quite uncomfortable for modern times. If her husband is no longer living, once a woman reaches 65 all of her property is automatically passed on to their children and it is then their children's responsibility to care for them in return. This can either be moving in with one son / daughter, or the duty is shared between everyone. In my friend's case her mum and grandmother move from house to house every 15 days. This isn't so difficult for them as the whole family owns and mostly lives in their own apartment block. During the summer my friend goes to Turkey twice to do her share and takes her mum and grandmother away with her on a holiday of their choice. They are trying to work out an arrangement where mum and grandma can live in their own apartment, but they don't want to as to them that would mean that their children don't want to look after them!

[eleanor2]

i do agree jazz about old people not wanting to spend money on themselves.i think it is only this old generation tho .it has taken me years to get my inlaws to see that we would rather them spen thier money than keep it for a rainy day.at last they are seeing sense.but we have to see that the old just wont chuck old out and buy new.they wont have luxury.i tried to get inlaws chuck an old table out and let me buy them some nice draws to put there stuff in.but mum in law went mad.the old stuff is better than new etc.it was a table we'd given them in the first place.you just cant change old people who are set in their ways from the old days.i think us lot as the older generation will be so different.we are used to spoiling ourselves more.

[jazzactivist]

It is very hard work getting some of the really elderly people to spend money on themselves, isn't it? I remember my elderly Nan had a broken vacuum cleaner that she just wouldn't get rid of and buy a new one. Even my offer to buy one was refused. Every time she used it she used to clean out the bag and clean the whole vacuum cleaner and then spin the wheels with her hand really quickly and switch it on as they were running. It was the only way that it would work. However, she would just say that it was wasteful to buy another one at her age! It must be because frugality was their way of life when they were younger, and I can see the point in older items being better made and more durable than new ones. It is really only our generations that are more affluent.

[Ivy]

I'm against inheritance tax, for ordinary people, for as you say I have already paid tax on anything I own so why should my children have to pay again. We have worked hard all our lives and it is nice to think you can make life easier for children and grandchildren. I think if you have millions to leave then that is a different matter and some tax should be paid on it.


I do agree that it's not fair asking tax for the same thing twice and why should someone who inherits millions pay tax whereas the man on the street inheriting a semi detached cottage should not? The millionaires parents have payed tax on their income as well.

[franbee]

The other current problem now is if elderly people need to live in a care home or pay for care, if they have any property at all they would have to pay for care themselves, which is fine, but as you never know if this might be necessary, you have to have some sort of investment to pay for your care, you can hardly expect your family to pay, they will have their own financial committments.

[eleanor2]

i dont know what the answer is but it doesnt seem fair.those who have a home and savings have to pay for care homes.those that havnt worked for a home and saved instead of spending.dont have to pay.they get it on the state.so really many lose there inheritance anyway to care homes.still i suppose if they could cae for their parents.they wouldnt.i'm sure its all deeper than we think.

[dragonfly]

Jazz I don't like the Turkish way at all. Not having the choice to live where you want and having to move every few days, I would feel like a gypsy. A lot of old people in this country stay in big old houses because they can't cope with change and don't want to move out of the home they have lived in for years.

I certainly arn't living my life just to have something to leave the boys but whatever I do have when I die I want my boys to have not the government that has taken money off me all my adult life. If I had a say in what my tax is used for then it would be a different matter. It wouldn't go to idle people who don't work or MP's expenses.

Ivy if someone leaves me an estate worth millions I won't mind paying tax on it.:D

[eleanor2]

personally all i own has been worked hard for.i see my home and belongings etc as something that is neccesary.it is expensive and hard work to upkeep and repair.thank goodness for the little pleasure of having something to pass on to my children and grandchildren.