MEMBER FEATURE: Inheritance tax - RIP? By Dan Martin

Following a week of debate over the future of UK inheritance tax, Dan Martin asks AccountingWEB members for their views on whether the levy should be abolished.

A few years ago you couldn't keep former transport secretary Stephen Byers off the front pages of national newspapers and out of the television news headlines.

Continued...

» Register now

The full article is available to registered AccountingWEB members only. To read the rest of this article you’ll need to login or register.

Registration is FREE and allows you to view all content, ask questions, comment and much more.

Comments

IHT should be 100%

tomtrainer | | Permalink

Why should one person have an advantage over another, just because their parents were richer?

Aren't we all supposed to be born equal?

IHT should be 0%

AnonymousUser | | Permalink

Tom Trainer is right. We are all born equal - ie with equal rights.

That does not mean we are all born with an equal (or,indeed, any) right to inherit our parents' wealth.

But it does mean all our parents are born with an equal right to leave whatever wealth they create during their life to whoever they want.

IHT robs them of that right. It is effectively legalised theft.

Key facts

dan06 | | Permalink

Duncan, you make a fair point. I took the title from the original Halifax press release. I have now changed it.

Dan Martin
Business Editor
AccountingWEB

hmmm

AnonymousUser | | Permalink

since when have "projections" and "estimates" been "key facts"?

cheers Dan

AnonymousUser | | Permalink

I'm always wary of press releases - especially from building societies and banks!!

Taxation not the only issue

NeilW | | Permalink

A tax that involves taking every second child and selling it into slavery is "easy to assess the correct liability, hard to avoid, is payable by those that can afford it".

But it doesn't make it right.

NeilW

A simple reform of Inheritance Tax

Anonymous | | Permalink

The problem is that far too many estates are caught due to rising house prices. So the threshold should be increased to, say, £500,000 and thereafter indexed annually in line with house prices.

BPR?

AnonymousUser | | Permalink

hold on though, doesnt 100% BPR rescue many small businessmen from the spectre of IHT?

theres also lifetime giving, ie the PET regime which frankly is a terrific tax break.

Why not gear up on a house and give away the cash?

Viva Espana

bobdoney | | Permalink

Being completely ignorant of these matters won't deter me from chipping in. Presumably people who retire to Spain or Bulgaria won't be liable for this tax. So who will left to pay it?

Another tax as unpopular as the Poll Tax

Anonymous | | Permalink

The Community Charge, cleverly marketed by the then Government opposition and media was largely accountable for the downfall of Margaret Thatcher. Perhaps Inheritance Tax will be the downfall of our present over legisaltive Government or at least knock some sense in to them to reduce the many burdens that have been imposed on small businesses and our endeavours at wealth creation - I for one are very quickly becoming very apathetic on several fronts - employing people, saving for a pension, personal security, health and bureaucracy, to name but a few. It would appear that no matter how much money our Government can extort from us by whatever means, they seem intent on squandering the proceeds (just look at the health service) - surely after earning it, paying tax on it, we should have the right to decide how to spend it, even when we are dead!

IHT is based on domicile

Anonymous | | Permalink

Not really, IHT is based on domicile and your properties overseas etc are all part of your estate unless you severe you ties with the UK and become non docimile. But of course, if your property is in Russia and non of your heir is in UK, as to how UK IHT law can be enforced is another matter.

I am not complete against IHT as long as the threshold is high (about £100m) and so that allow people to 'look after their heirs' and yet not to create ultra huge dynastic families where new comers cannot compete with them. Ironically, current IHT tax those who are not really that wealtyh while leaving those who are ultra wealth alone..

Oh no, you do not necessarily need to give everything away and be in the mercy of your children, you just need good lawyers and tax advisor and plety of cash to set up those stuffs..

Abolish PPR

orlando sargent | | Permalink

Set IHT limit at £1m (surely reasonable), abolish ppr and introduce rollover relief on residential properties previously qualifying for ppr (tax take maintained as wealthy exit the housing market). It's got to be better.

Reform

markfaherty | | Permalink

Inheritance tax is flawed, it even is incorrectly named; it is not a tax on inheritance but a duty on the deceased or lifetime transferor.

It is high time this unfair and complex tax was reformed and a model which in my opinion could be used is the Irish Capital Transfer Tax system. This is a true tax on Inheritance as the tax is charged on the donee who has lifetime exemptions, the amount of which depends upon his/her relationship with the donor. Currently transfers between spouses are exempt. Lifetime transfers from each parent are exempt up to €478,155, from siblings, uncles/aunts, grandparents and children €47,815 and from any other person €23,908. Please note that the value of the gift is after indexation.

There would also need to be some reforming of the UK Capital Gains Tax tretament on gifts but that in my opinion also needs a good shake up.

I am not advocating that the same rates should be used in the UK but the principle is much fairer and simpler.

Any comments?

Abolish IHT

Anonymous | | Permalink

Tom, I'm afraid we are not all equal...sorry to let you down.

Obvioulsy your soicalist views are based on evny and this is what IHT is all about.

Tax on the dead or the bereaved!

AnonymousUser | | Permalink

IHT is levied on estates because the taxpayer is dead and cannot complain. Those who inherit the estate after tax will be glad just to get some money/assets and will perhaps feel that the tax was paid by the deceased.

Taxes are generally levied where there is no negative impact on the government levying the tax. If inheritence tax is abolished it would be replaced by an annual tax on wealth because it loses the least votes! The wealthy may not vote labour anyway!

The tax system is generally complicated and unfair (sometimes) I think the whole tax system should be re-designed.

Perhaps all persons living in the country should account for where their income comes from. If you seek out the long term benefit scroungers, the ghosts who work and pay no tax the tax raised or benefits saved may replace the inheritence tax lost.

Alistair Postle

Not fair but ...

skeeve | | Permalink

Nobody likes taxes but given the choice, would we rather pay taxes out of our ongoing incomes, or pay tax on (essentially) gifts from our relatives ?

I don't doubt that this is a particularly nasty and pernicious tax, but it is much better than some of the proposed replacement taxes.

Not hard to avoid

Anonymous | | Permalink

William Saddleton said.. "hard to avoid..",

Not really hard to avoid provided you have enough money to get a good trust lawyer and have sufficient expense to setup the appropriate structure. Some foreign jurisdiction simply does not regconise fiscal claims and holding asset in island with no diplomatic relationship with UK with do the job. Otherwise, Switzerland will ignore corporation on tax related claim also.

Alistair Postle said: "Those who inherit the estate after tax will be glad just to get some money/assets and will perhaps feel that the tax was paid by the deceased."

This is not always the case Alistair. If one is given 100k by his/her parent to get onto the properly ladder and then the parent (donor) dies within 7 years (particular severe if within 3 years), the chap will be in nasty surprises and will potential have to sell his house !!

Making IHT feel fairer

kjevans | | Permalink

Having just paid a horrendous(and totally unexpected)sum on the deaths of my parents, I found that some aspects of IHT felt really unfair, so changing them might help without substantially reducing the tax take.

1. Why must IHT be paid *before* you inherit the estate - it really hurts to pay tax with a huge loan you've also paid interest on.

2. My parents very kindly helped me to buy a second-hand carout of their taxed income as part of a birthday present. Then they were daft enough to die only a couple of years later. Paying IHT on your birthday presents definitely feels unfair.

3. Why, if you accidentally underestimate the value of the property of the deceased do you have to pay extra IHT, but if you OVER estimate, you don't get a refund?

4. Why can't you set the (huge) solictor's bills incurred by the estate against the IHT?

It's bad enough losing a family member without all this.