Inheritance Tax


T

Toom Tabard

My wife and I are approaching the normal age for retirement. I have
taken
early retirement. Neither of us make any
claim on direct State benefits or tax credits. Neither of us has
inherited
wealth. We have both paid into our employers' pension schemes. We
bought a fairly average flat at a
time when the cost and high interest rates made it difficult to do so.
We
have, over many years, saved, and tried to make further investments to
ensure we have independence and choices in our old age.
Under New Labour, our pension scheme gains are taxed. My modest pension
is,
subject to a small personal allowance, taxed as 'earned income'.
The main benefit under our equity-based 'tax-free' PEPs and ISAs is now
taxed. The
interest on our cash savings is taxed, reducing the gains to less than
the erosion in
value caused by the real rate of inflation. Council tax increases
inexorably
at a rate greater than my 'inflation-proof' pension. The Treasury has
skimmed money from the Premium Bond Prize Fund, reducing our income
from
this to below the inflation rate. The prudent essentials of
life, such as the insurance premium on our home, are taxed. Essential
repairs to our roof are taxed at the same level as our young
neighbour's luxury home
extension.
New Labour now exhort us to work longer and make more provision for our
future, yet continue to tax every form of investment.
Despite this, we have made some progress in providing for ourselves.
Should
I die, rather than require the money for my old age, my wife will
inherit it
all. If she doesn't go wild with the money, but keeps it to provide for
her own needs, then her early death will result in us being rewarded
with an inheritance tax
bill of £120,000+.
This amount will go to the Treasury, rather than to our nominated
beneficiaries to provide independence and choices for them, and to
ensure they do not need
state benefits.
The Treasury will use this tax income to fund minimum income guarantees
and
pension tax credits for those who earned the same as us, but did not
save, invest, or buy a pension,
but ate out more often, went on more foreign holidays, and traded-in
the car each year for
the latest model. This tax is, for ordinary people attempting to be
independent
and provide for themselves, punitive and iniquitous.

Toom
 
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M

Miss L. Toe

This tax is, for ordinary people attempting to be
independent
and provide for themselves, punitive and iniquitous.

Toom



So which taxes would you raise instead or which spending would you cut ?
 
B

bluenep27

Miss said:
This tax is, for ordinary people attempting to be
independent
and provide for themselves, punitive and iniquitous.

Toom



So which taxes would you raise instead or which spending would you cut ?

We could save a few billions by bringing our troops back home and
letting other countries do their share. That would svae a few British
lives too.
 
M

Miss L. Toe

We could save a few billions by bringing our troops back home and
letting other countries do their share. That would svae a few British
lives too.
Only if we then dismissed them from the Army and paid them dole money
instead.

And, trying hard not to be disrespectful to many brave and valiant young
men, many of the troops are young tough single men and guess where they
would end up Friday and Saturday nights.....
 
A

Andrew MacPherson

We could save a few billions by bringing our troops back home
Home or abroad, they still have to be paid & trained.

As a fan of the Swedish model (ie tax 'em till it hurts, then a bit
more) I have nothing to complain about in the UK. Running a country
costs serious money, and no matter what any politician of any flavour
ever promises, the overall tax burden (as a proportion of income) never
shifts very far one way or another.

My only complaint at the moment is that nobody's had the courage to roll
NI and Tax into one. It's all the same really. As for inheritance tax,
any tax you get to pay after you die has to be a great thing.

Andrew McP
 
J

Jim Ley

Only if we then dismissed them from the Army and paid them dole money
instead.
Er, no, the cost of keeping them overseas is a lot higher than when
training or in home base even in straight pay quite apart from the
huge costs in feeding and supplying them. so considerable savings
would be made.

Jim.
 
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G

google

Andrew said:
My only complaint at the moment is that nobody's had the courage to roll
NI and Tax into one. It's all the same really. As for inheritance tax,
any tax you get to pay after you die has to be a great thing.
Because the hoi polloi will start agitating when they see the rich man
in his castle only paying 41% while they are paying 33%.
(If you roll in employers contributions as well it's something like 48%
against 41%)

It would also mean having to give much more back via pension
contributions to the working classes. At the moment the richer get
(almost) all their tax refunded while the poorer only get 2/3.

The system is carefully designed to look fair while being as beneficial
as possible to the more wealthy.

Similar thing with capital gains tax. Why is there an additional 8800?
allowance for those who are fortunate enough to have large sums to
invest. How many basic rate taxpayers can there be that can use up
their CGT allowance each year?

I'd also expect that VAT as a proportion of income falls
disproportionately on the less well off.

(I'm not complaining; the system has done me very well thankyou. But I
do think the system is unfair)

Tim.
 
M

Miss L. Toe

(I'm not complaining; the system has done me very well thankyou. But I
do think the system is unfair)
I think the problem is that everybody agrees that a fair tax is one 'I'
don't have to pay :)

Maybe IHT is the only fair tax because only the dead pay it, and it does
only tax the rich. If they raise IHT to 80% and close the loopholes, maybe
they can bring some of the taxes down that 'I' pay.
 
G

google

I'd just add that the only tax I can think of that doesn't work like
this is inheritance tax.

Why isn't the IHT allowance for the recipient and the recipient taxed
instead of the allowance being on the estate and the estate taxed?

I can't get worked up about inheritance tax though. I don't really
understand why people think they have a right to inherit anything at
all. Taxing estates at 100% would probably encourage a lot more
bequests to charities and institutions. (I can understand wives,
husbands and dependent children being treated differently)

Think it was Isaac Asimov, "The only people who inherit anything by
right of birth are congential idiots."

Tim.
 
G

google

Miss said:
I think the problem is that everybody agrees that a fair tax is one 'I'
don't have to pay :)
Erm, not sure I'd agree there. While nobody likes paying tax and will
take every legal avenue to reduce their tax bill, I'd think a lot of
the people I associate with accept that it's required and generally pay
the tax they owe. (Never actually asked whether they think it is fair
and, if not, which way it should be adjusted though :) )

Tax is a subscription to a civilized society.

Tim.
 
A

Andrew MacPherson

I'd also expect that VAT as a proportion of income falls
disproportionately on the less well off.
I've wrestled with this one, but I can't think of a better way of taxing
what is mainly discretionary spending, especially now working tax
credits and assorted benefits go some way towards buffering the low paid.

Andrew McP
 
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M

Miss L. Toe

Andrew MacPherson said:
I've wrestled with this one, but I can't think of a better way of taxing
what is mainly discretionary spending, especially now working tax
credits and assorted benefits go some way towards buffering the low paid.

Andrew McP
The old system of a higher luxury rate of VAT on 'luxury' items seemed
reasonably fair to me.

But can we agree what luxuries are ?
 
R

Ronald Raygun

Tax is a subscription to a civilized society.
If only we had one, more of us would subscribe willingly
instead of having to be compelled to.
 
T

Tumbleweed

I'd just add that the only tax I can think of that doesn't work like
this is inheritance tax.

Why isn't the IHT allowance for the recipient and the recipient taxed
instead of the allowance being on the estate and the estate taxed?

I can't get worked up about inheritance tax though. I don't really
understand why people think they have a right to inherit anything at
all.
because that means that people then dont have a right to give what they want
to others without the state interfering.
I'm sure many people want to havea right to inherit, but many (most?) people
want to have a right to leave possessions to particular recipients as well.
 
G

google

Tumbleweed said:
because that means that people then dont have a right to give what they want
to others without the state interfering.
They can give whatever they like to whoever they want. What I don't
understand is why people think they should have a right to decide what
happens to their possessions when the only reason they are giving them
away is because they can't possibly use them themselves.

(Obviously I make a distinction between those who were already
benefiting from the estate and those who are only benefiting because of
the death. I think husbands, wives, dependent children have every moral
right to inherit everything)

I'm not arguing that inheritance should be done away with, just that I
can't understand the righteous indignation of people who complain about
"their inheritance" being spent on nursing homes etc.

I'm delighted that my parents are enjoying their retirement and
spending some of what they have saved up over the years. I won't turn
it down if there is something for me to inherit when they die but I'm
relieved that isn't going to be preceded by "I wish we had done XYZ
while we were fit enough but we wanted to save something for your
inheritance".

Tim.
 
T

Toom Tabard

Miss said:
The old system of a higher luxury rate of VAT on 'luxury' items seemed
reasonably fair to me.
We can, I hope, agree that essential roof repairs and painting my
windows to maintain them from rotting are not luxuries. When my
12-year-old washing machine finally dies, it is not clear whether a
bog-standard replacement is a luxury. I don't think it is, but maybe we
should be expected to go down to the river and bash our laundry on the
rocks. But if too many of us opted for that, they would probably impose
a rock tax.

Toom
 
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T

Toom Tabard

I'd just add that the only tax I can think of that doesn't work like
this is inheritance tax.

Why isn't the IHT allowance for the recipient and the recipient taxed
instead of the allowance being on the estate and the estate taxed?

I can't get worked up about inheritance tax though. I don't really
understand why people think they have a right to inherit anything at
all. Taxing estates at 100% would probably encourage a lot more
bequests to charities and institutions. (I can understand wives,
husbands and dependent children being treated differently)

Think it was Isaac Asimov, "The only people who inherit anything by
right of birth are congential idiots."
It's not a matter of a right to inherit, though there are those who
think the rest of us should pay for the long-term care of their aged
parents, so that they can inherit the house and all the savings.

It is a matter of whether the wealth of individuals should be disposed
of as directed by them. There is a problem if we require people quite
reasonably to fund their own retirement. Few of us know in advance if
we require many hundreds of thousands to pay for 30 years retirement,
or only need tuppence until we drop dead later today. If I, because my
values are not material, have accumulated saving from taxed earnings,
and invested them and paid the tax on the investments, and am prepared
to look after myself, and don't qualify for benefits because I
accumulated these resources, then I have some difficulty with the
notion that, should I die soon, £120,000 should go to the government
rather than be distributed according to my wishes.
We're not talking vast wealth here, just people making reasonable
provision to maintain independence.
That is, however, a matter of attitude to personal responsibility and
accountability.

Toom
 
M

Miss L. Toe

.. If I, because my
values are not material, have accumulated saving from taxed earnings,
and invested them and paid the tax on the investments, and am prepared
to look after myself, and don't qualify for benefits because I
accumulated these resources, then I have some difficulty with the
notion that, should I die soon, £120,000 should go to the government
rather than be distributed according to my wishes.
Toom




Why is that any different to paying the mortgage for years out of taxable
income, then having to pay council tax based of the value of ones home ?
 
J

Jeff

"If I, because my
values are not material, have accumulated saving from taxed earnings,
and invested them and paid the tax on the investments, and am prepared
to look after myself, and don't qualify for benefits because I
accumulated these resources, then I have some difficulty with the
notion that, should I die soon, £120,000 should go to the government
rather than be distributed according to my wishes."


But it is being distributed according to your wishes.
It's just that the recipients (effectively) are having to pay tax on their
windfall.

Seems fair enough, especially as they typically pay far less than those of
us who have to work for what monies we receive!

Jeff
 
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T

Tumbleweed

They can give whatever they like to whoever they want. What I don't
understand is why people think they should have a right to decide what
happens to their possessions when the only reason they are giving them
away is because they can't possibly use them themselves.

(Obviously I make a distinction between those who were already
benefiting from the estate and those who are only benefiting because of
the death. I think husbands, wives, dependent children have every moral
right to inherit everything)

I'm not arguing that inheritance should be done away with, just that I
can't understand the righteous indignation of people who complain about
"their inheritance" being spent on nursing homes etc.

I'm delighted that my parents are enjoying their retirement and
spending some of what they have saved up over the years. I won't turn
it down if there is something for me to inherit when they die but I'm
relieved that isn't going to be preceded by "I wish we had done XYZ
while we were fit enough but we wanted to save something for your
inheritance".

Tim.

eh?

"I don't really
understand why people think they have a right to inherit anything at
all."

and;

"I think husbands, wives, dependent children have every moral
right to inherit everything"

and even in the same paragraph...
"They can give whatever they like to whoever they want"
and;
"why (do) people think they should have a right to decide what
happens to their possessions"
 

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