Inheritance Tax Question

[cheesyboy]

I'm not entirely certain that that's valid -- in my own opinion, of course.

"Old money" will always be around, but when people have worked hard to amass that fortune then what further claim should be had upon it? It was taxed in the beginning, so why should it be further chipped on as the years move on?

If I were mega-rich, through my own legitimate toils and tax paying, I'd like to think that the money is mine to do whatever I wish with. Even if that means passing it on when I die without further interference. That seems perfectly reasonable to me.

I'm interested in knowing your opinions on that.

In brief, my opinion is something like this;

If we accept taxation is inevitable (it is), then we should collect it in such a way that hardship on those clobbered with it is minimised.

I see few better ways of doing that than, effectively, taxing people who are about to receive very large amounts of cash which they have contributed nothing toward earning. It doesn't make the will beneficiary worse off than before the transaction, since they are still receiving a lot of unearned money. There seems a lot of fairness in that, to me.

 

[Deleted member 66701]

I'm not entirely certain that that's valid -- in my own opinion, of course.

"Old money" will always be around, but when people have worked hard to amass that fortune then what further claim should be had upon it? It was taxed in the beginning, so why should it be further chipped on as the years move on?

If I were mega-rich, through my own legitimate toils and tax paying, I'd like to think that the money is mine to do whatever I wish with. Even if that means passing it on when I die without further interference. That seems perfectly reasonable to me.

I'm interested in knowing your opinions on that.

But the person you're giving it to hasn't done anything to earn that money have they?

Remember, if you die, it's not YOU that's being taxed again..................

 

[Pestilence]

But the person you're giving it to hasn't done anything to earn that money have they?

Remember, if you die, it's not YOU that's being taxed again..................

I tend not to think of it in terms of the personal effort involved in 'earning' that money. I see the money itself as what it is -- an asset; an object. What you're saying is that it may not be the dead person being taxed, but the living person is being taxed. For little more than being alive. On currency that has already been taxed before.

When it was first earned, the requisite tax was paid. Why should it be different when it's handed over to someone else than, say, handing over an already procured object on which tax has also been paid, for example a precious vase, work of crystal or even a television, while still alive?

 

[cheesyboy]

When it was first earned, the requisite tax was paid. Why should it be different when it's handed over to someone else than, say, handing over an already procured object on which tax has also been paid, for example a precious vase, work of crystal or even a television, while still alive?

It's not different; those items are valued as part of the estate.

 

[Amp34]

But the person you're giving it to hasn't done anything to earn that money have they?

Remember, if you die, it's not YOU that's being taxed again..................

But you're not taxing the one receiving. You're taxing the person unfortunate enough to die...

If you were taxing the person receiving the money then each person receiving would have a tax free limit, not the entire estate.

Edit: receiving, not giving...

 

[dowie]

When it was first earned, the requisite tax was paid. Why should it be different when it's handed over to someone else than, say, handing over an already procured object on which tax has also been paid, for example a precious vase, work of crystal or even a television, while still alive?

that's how tax works... you don't just get to set aside some sum of money and claim that tax has been paid on that sum ergo it should remain tax free...

you get paid, you get taxed, you spend your money which has been subject to tax already on some goods, you pay VAT as part of that... the entity selling your goods might well pay tax on its profits, its employees will pay tax on their earnings etc... and so it goes on

we tax spending, we tax income, capital gains, profit made by companies, the transfer of assets etc...

 

[Nitefly]

If their entire estate goes over the limit, and there is a record within the estate of the transaction, then yes.

Calculating the value of the taxable estate can be pretty daym tricky!

 

[Strife212]

Inheritance tax must surely be one of the most defrauded taxes.

 

[Jonnybmac]

But the person you're giving it to hasn't done anything to earn that money have they?

Remember, if you die, it's not YOU that's being taxed again..................

but that person has worked enough to earn that money. they sacrifised their life to achieve something that was worth passing on, and now some of what they've worked hard for is taken away.

can you not just accidently on purpose gamble your estate over to someone else?

 

[dowie]

can you not just accidently on purpose gamble your estate over to someone else?

not on a random coin flip you couldn't... I think they'd see right past your claim of losing a bet....

on the other hand you might be able to get away with doing it via a poker site... chip dump via a heads up table... (or perhaps be a bit more subtle than that). As far as HMRC is then concerned the deceased was a keen gambler deposited several times on pokerstars, party, full tilt etc.. and lost 100k over a prolonged period of time (which is at least plausible and does happen)... could add in further deception by ensuring the chips aren't dumped to you but to a third party who later dumps or transfers to you...

 

[spoffle]

Inheritance tax must surely be one of the most defrauded taxes.

Probably, I know I wouldn't declare a cash gift from a family member.

 

[Pestilence]

It's not different; those items are valued as part of the estate.

Yep. Hence my clause about giving them to someone else while still alive.

Why is an arbitrary number of years leeway given to that in case you die seen as acceptable?

that's how tax works... you don't just get to set aside some sum of money and claim that tax has been paid on that sum ergo it should remain tax free...

you get paid, you get taxed, you spend your money which has been subject to tax already on some goods, you pay VAT as part of that... the entity selling your goods might well pay tax on its profits, its employees will pay tax on their earnings etc... and so it goes on

we tax spending, we tax income, capital gains, profit made by companies, the transfer of assets etc...

I understand how tax works, and I know how Inheritance Tax factors in to the whole cycle. Money is taxed at almost every avenue and transaction. That doesn't stop it being unfair.

 

[dowie]

I understand how tax works, and I know how Inheritance Tax factors in to the whole cycle. Money is taxed at almost every avenue and transaction. That doesn't stop it being unfair.

Why is it unfair as opposed to other taxes?

I mean some people think VAT is unfair as poor people have to spend a larger % of what they earn in order to get by so it could be seen as affecting them disproportionately.

IHT on the other hand - well you're dead when it comes into effect, its aim is to stop large chunks of wealth from being perpetually handed down - I'm really not seeing the unfair aspect. So far you've just pointed out that tax has already been paid earlier down the line - but that is the case with tax in general...

 

[FoxEye]

It's there to prevent concentration of wealth.

http://www.ibtimes.co.uk/hmrc-wants-wealthy-pay-inheritance-tax-before-they-die-1460630

Shock horror as very wealthy people find ways to avoid tax. IHT being no exception.

As with most tax, the wealthiest in society just don't pay it. As they can afford an army of accountants to set up elaborate schemes and financial structures.

 

[cheesyboy]

Yep. Hence my clause about giving them to someone else while still alive.

Why is an arbitrary number of years leeway given to that in case you die seen as acceptable?

practical reasons, as much as anything: paperwork isn't always available going back so far.

Also, a recognition that the gifter is giving up the benefit of their wealth in a way that they wouldn't when retaining it up until death or near-death

I understand how tax works, and I know how Inheritance Tax factors in to the whole cycle. Money is taxed at almost every avenue and transaction. That doesn't stop it being unfair.

What tax isn't "unfair", at least on some level?

See my response to your first question in the thread as to why I see IHT as one of the more " fair" taxes (post #21)

 

[spoffle]

Unreasonable is a much more appropriate term than unfair in these circumstances. Even if they mean the same thing for all intents and purposes.

 

[Deleted member 66701]

http://www.ibtimes.co.uk/hmrc-wants-wealthy-pay-inheritance-tax-before-they-die-1460630

Shock horror as very wealthy people find ways to avoid tax. IHT being no exception.

As with most tax, the wealthiest in society just don't pay it. As they can afford an army of accountants to set up elaborate schemes and financial structures.

I didn't say it worked

 

[Pestilence]

practical reasons, as much as anything: paperwork isn't always available going back so far.

Also, a recognition that the gifter is giving up the benefit of their wealth in a way that they wouldn't when retaining it up until death or near-death

What tax isn't "unfair", at least on some level?

See my response to your first question in the thread as to why I see IHT as one of the more " fair" taxes (post #21)

I guess you're right.

I'd argue that I don't see what claim the government has to money that has already been earned and taxed.

However, that opens up the avenues that you and others have described regarding the fact that pretty much all money in circulation has already been taxed at some point, whether that be VAT or other mechanisms. That in turn opens up a whole other world of discussion that I'm just too beleaguered to bother with.

So, it is the way it is. That's that. But I still don't have to like it. Grumble grumble grumble.

 

[The_Abyss]

Quick question... If you were to receive a gift of £10k and someone dies within the 7 year 'limit', is inheritance tax payable on that gift, even if it was received all those years ago?

Letter of the law and reality are often two quite different things.

IHT is potentially payable on the gift. In reality it is unlikely to be. For a start, there's the annual gift allowance. Then there's the practicality of knowing who to tax. Remember, it isn't the recipient of the gift being taxed, it is the residual estate. In fact, if the £10,000 gift is part of the estate then it is far more likely that the residual estate will be taxed more, i.e. the value of the gift will be deducted from the nil rate band and the remaining estate will be taxed accordingly.

If you're also a final beneficiary then you'll end up paying the tax one way or another, unless the seven years have elapsed. Don't worry about it.

 

[platinum87]

Transfer the money abroad, than back to whoever you are sending the money too.

However if you can fully understand the level of incompetence than you would not bother with that and simply live in a state of blissful ignorance.