Inheritance

in reality, all of this has been a total load of old bollocks
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yomptepi
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Re: Inheritance

Postby yomptepi » 01 Jun 2021, 10:51

robertff wrote:
Not quite right my friend, the only reason I know this is because I have just completed probate and inheritance for my in laws.

The current limit is £325000 per person and if they own a house when they die the limit then increases by £175000 per person, so in fact in the case of a married couple your inheritance could actually reach £1000000 before any inheritance tax is required. The amounts also transfer to the remaining spouse if one dies before the other but the house must still be owned by them. If the house has been sold, say to pay for care home costs, you lose out and only the combined figure of £650000 is tax free. With a house, after the £1000000 everything is taxed at 40% in the £.

These things change very regularly however.


.


When we did my mothers estate, the first figure was for the estate, and not per person. The house was valued and added to the pot, and taxed. How many heirs there were made no difference to tax yeald.
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Re: Inheritance

Postby KeithPratt » 01 Jun 2021, 11:03

The notion that the state can spend money in better ways than people in general is a fallacy. That's why countries like Sweden, Australia and Norway (all decent, "progressive" countries) have abolished Inheritance Tax entirely.

The issue furthermore is that the super-rich will ALWAYS find ways to get out of it - if you tax them too much, they will because they'll have access to lawyers etc. People will always get out of ways to pay tax and if they have the money they will do. There is almost no point in the mantra "well they should pay" because, ultimately, the default setting of virtually all people who have serious amounts of money is that they will pay as little as possible. Furthermore, the fluid nature of money today means that people with cash will devise ingenious mechanisms to avoid paying anything if they can - for every country that says "you will have to pay" there's some little offshore tax haven that will gladly have the money deposited in their country for a modest fee. It is the nature of things.

The idea of inheritance tax is much better than the reality - it taxes those who probably can't really afford it, particularly if, like most people nowadays in the UK, most of the value of the inheritance is tied up in the person's property - with house prices rising continually, your old aunt-who-never-married 2 bed flat in Brixton is suddenly worth £500,000 and then you're taxed at 40% of it. The wealthy can, if they have a lot of capital, essentially bypass it due to that 50,000 page tax code. The Duke of Westminster paid no inheritance tax on an estate of £8 billion.

Tax everyone nominally at 5 to 10% and you'd have a much better income I suspect.

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Re: Inheritance

Postby yomptepi » 01 Jun 2021, 11:13

A good idea. But the reality is it would start at 5% and then go up every budget until it was 50%. Just like VAT.
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Re: Inheritance

Postby Robert » 01 Jun 2021, 11:30

KeithPratt wrote:The notion that the state can spend money in better ways than people in general is a fallacy. That's why countries like Sweden, Australia and Norway (all decent, "progressive" countries) have abolished Inheritance Tax entirely.

The issue furthermore is that the super-rich will ALWAYS find ways to get out of it - if you tax them too much, they will because they'll have access to lawyers etc. People will always get out of ways to pay tax and if they have the money they will do. There is almost no point in the mantra "well they should pay" because, ultimately, the default setting of virtually all people who have serious amounts of money is that they will pay as little as possible. Furthermore, the fluid nature of money today means that people with cash will devise ingenious mechanisms to avoid paying anything if they can - for every country that says "you will have to pay" there's some little offshore tax haven that will gladly have the money deposited in their country for a modest fee. It is the nature of things.

The idea of inheritance tax is much better than the reality - it taxes those who probably can't really afford it, particularly if, like most people nowadays in the UK, most of the value of the inheritance is tied up in the person's property - with house prices rising continually, your old aunt-who-never-married 2 bed flat in Brixton is suddenly worth £500,000 and then you're taxed at 40% of it. The wealthy can, if they have a lot of capital, essentially bypass it due to that 50,000 page tax code. The Duke of Westminster paid no inheritance tax on an estate of £8 billion.

Tax everyone nominally at 5 to 10% and you'd have a much better income I suspect.


With the current changes inEuropean banking and specifically compliance, thelittle tax havens are on their last feet. People may be ok storing their wealth there but wouldn’t want to live there. If you are in a EU country it is increasingly difficult to receive money on your account coming from a tax haven.

Sweden btw may have 0% IT but 25% VAT. Meaning that every schmuck contributes to government spending but those that got an inheritance are left alone.

What’sthe difference between a bonus forwhich people have worked ( let’s just assume that) and an inheritance?

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Re: Inheritance

Postby yomptepi » 01 Jun 2021, 11:38

Robert wrote:
What’sthe difference between a bonus forwhich people have worked ( let’s just assume that) and an inheritance?


The tax has already been paid on the inheritance at least once.
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Re: Inheritance

Postby Robert » 01 Jun 2021, 12:12

yomptepi wrote:
Robert wrote:
What’sthe difference between a bonus forwhich people have worked ( let’s just assume that) and an inheritance?


The tax has already been paid on the inheritance at least once.



Yes but not by the receiver. It’s like saying you don’t have to pay income tax because the company you work for has already paid corporate tax

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Re: Inheritance

Postby Fonz » 01 Jun 2021, 12:33

In the UK we gave these thresholds which are somewhat arbitrary. For some, they may seem too high, for some, too low. For some, there’s a viewpoint that everything should become the State’s property.

For those silent observers of the thread, how would you feel if the inheritance tax threshold was reduced to say £100k? Every property owner would then be affected, and any hope of inheriting your mum and dad’s place would be gone.
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Re: Inheritance

Postby yomptepi » 01 Jun 2021, 13:03

Robert wrote:
yomptepi wrote:
Robert wrote:
What’sthe difference between a bonus forwhich people have worked ( let’s just assume that) and an inheritance?


The tax has already been paid on the inheritance at least once.



Yes but not by the receiver. It’s like saying you don’t have to pay income tax because the company you work for has already paid corporate tax



No it isn't, because that is a business. This is peoples savings and their homes, which they have already paid all sorts of taxes on. This isn't an investment, or a deal. It is the things we spend our lives saving and growing, and the government has already taken a huge slice of everything it has taken to achieve those savings. Of course if the sums are very large an inheritance tax is not unreasonable, but in most cases it is unfair and very unpopular.
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Re: Inheritance

Postby KeithPratt » 01 Jun 2021, 13:31

We managed to pay nothing on my father's estate by £500 back in 2019. If, for example, I had the property valued two years later, we would have paid 40% on £650,000 and the three of us would have had a considerably smaller amount.

It has pulled my sister out of relative penury and given her a chance of being a property owner.

When you think of how much money has been spunked on keeping people in furlough....

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Re: Inheritance

Postby Geezee » 01 Jun 2021, 13:33

Robert wrote:
KeithPratt wrote:The notion that the state can spend money in better ways than people in general is a fallacy. That's why countries like Sweden, Australia and Norway (all decent, "progressive" countries) have abolished Inheritance Tax entirely.

The issue furthermore is that the super-rich will ALWAYS find ways to get out of it - if you tax them too much, they will because they'll have access to lawyers etc. People will always get out of ways to pay tax and if they have the money they will do. There is almost no point in the mantra "well they should pay" because, ultimately, the default setting of virtually all people who have serious amounts of money is that they will pay as little as possible. Furthermore, the fluid nature of money today means that people with cash will devise ingenious mechanisms to avoid paying anything if they can - for every country that says "you will have to pay" there's some little offshore tax haven that will gladly have the money deposited in their country for a modest fee. It is the nature of things.

The idea of inheritance tax is much better than the reality - it taxes those who probably can't really afford it, particularly if, like most people nowadays in the UK, most of the value of the inheritance is tied up in the person's property - with house prices rising continually, your old aunt-who-never-married 2 bed flat in Brixton is suddenly worth £500,000 and then you're taxed at 40% of it. The wealthy can, if they have a lot of capital, essentially bypass it due to that 50,000 page tax code. The Duke of Westminster paid no inheritance tax on an estate of £8 billion.

Tax everyone nominally at 5 to 10% and you'd have a much better income I suspect.


With the current changes inEuropean banking and specifically compliance, thelittle tax havens are on their last feet. People may be ok storing their wealth there but wouldn’t want to live there. If you are in a EU country it is increasingly difficult to receive money on your account coming from a tax haven.

Sweden btw may have 0% IT but 25% VAT. Meaning that every schmuck contributes to government spending but those that got an inheritance are left alone.

What’sthe difference between a bonus forwhich people have worked ( let’s just assume that) and an inheritance?


And certainly Sweden and Norway are NOT countries you want to highlight if you want to support the notion that "the state can spend money in better ways than people in general is a fallacy", given that these countries have some of highest tax bases in the world and have very well-functioning economies and welfare systems. They just happen to have different taxes and decided against inheritance taxes primarily because of the amount of abuse and loopholes. But overall high tax rates highlight that wealthy inhabitants do not, generally, find the loopholes that you are talking about. Sure, of course there are exceptions and/or people who will move to lower tax countries, but it has not resulted in a brain drain or a hit against the economy, or indeed, a change in strategy.
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Re: Inheritance

Postby Robert » 01 Jun 2021, 13:56

yomptepi wrote:
Robert wrote:
yomptepi wrote:
The tax has already been paid on the inheritance at least once.



Yes but not by the receiver. It’s like saying you don’t have to pay income tax because the company you work for has already paid corporate tax



No it isn't, because that is a business. This is peoples savings and their homes, which they have already paid all sorts of taxes on. This isn't an investment, or a deal. It is the things we spend our lives saving and growing, and the government has already taken a huge slice of everything it has taken to achieve those savings. Of course if the sums are very large an inheritance tax is not unreasonable, but in most cases it is unfair and very unpopular.


In fact it has been other people’s savings and homes and those may have paid taxes on it. The receivers didnothing for it other than being born in that particular family.

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Re: Inheritance

Postby yomptepi » 01 Jun 2021, 15:07

Robert wrote:
yomptepi wrote:
Robert wrote:

Yes but not by the receiver. It’s like saying you don’t have to pay income tax because the company you work for has already paid corporate tax



No it isn't, because that is a business. This is peoples savings and their homes, which they have already paid all sorts of taxes on. This isn't an investment, or a deal. It is the things we spend our lives saving and growing, and the government has already taken a huge slice of everything it has taken to achieve those savings. Of course if the sums are very large an inheritance tax is not unreasonable, but in most cases it is unfair and very unpopular.


In fact it has been other people’s savings and homes and those may have paid taxes on it. The receivers didnothing for it other than being born in that particular family.


How do you know that? Many people spend much of their middle years looking after their parents, and investing in those same properties.
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Re: Inheritance

Postby Robert » 01 Jun 2021, 15:59

yomptepi wrote:
Robert wrote:
yomptepi wrote:

No it isn't, because that is a business. This is peoples savings and their homes, which they have already paid all sorts of taxes on. This isn't an investment, or a deal. It is the things we spend our lives saving and growing, and the government has already taken a huge slice of everything it has taken to achieve those savings. Of course if the sums are very large an inheritance tax is not unreasonable, but in most cases it is unfair and very unpopular.


In fact it has been other people’s savings and homes and those may have paid taxes on it. The receivers didnothing for it other than being born in that particular family.


How do you know that? Many people spend much of their middle years looking after their parents, and investing in those same properties.


I don’t. Just like your ‘many people invest’ is a wild guess. There is a solution for cases like this though. If people in their middle years put those investments on paper, there won’t be an argument with IRS.

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Re: Inheritance

Postby Fonz » 01 Jun 2021, 16:05

Ha. How do even begin to quantify that kind of ‘investment’. That kind of familial/social contract is difficult to formulate at the best of times, never mind the money. Plus, it’d be incredibly open to abuse or fraud, just as every other aspect of taxation.
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Re: Inheritance

Postby Robert » 01 Jun 2021, 16:18

Fonz wrote:Ha. How do even begin to quantify that kind of ‘investment’. That kind of familial/social contract is difficult to formulate at the best of times, never mind the money. Plus, it’d be incredibly open to abuse or fraud, just as every other aspect of taxation.



Yes and if the inheritance is formulated as such, it’s basically a salary for services rendered. Tax!