Inheritance Tax - Theft or reasonable?

[Salu]

I saw a car with a sticker saying this today on my way to work. It's a Daily Express campaign with it's aim to force the government to drop it.

Why should the government tax money that has already been taxed? Now that the house prices have soared more and more people are falling into the threshold. Is it fair? Surely it's an outdated tax that needs to be scrapped?

On the other hand the tax books have to balance so where would the deficit be generated from? Wouldn't you rather tax dead people than pay extra income tax?

The house price aspect is moot, I think the threshold should be adjusted to take more account of this.

Setting up trust funds can avoid inheritance tax, but unfortunately, the people most likely to take advantage of this are the ones who are rich enough to have someone else managing their affairs. The 'ordinary' people who are increasingly falling into the inheritance tax catchment may be less aware of the options.

[Nugget]

Originally Posted by Salu

I saw a car with a sticker saying this today on my way to work. It's a Daily Express campaign with it's aim to force the government to drop it.

Why should the government tax money that has already been taxed? Now that the house prices have soared more and more people are falling into the threshold. Is it fair? Surely it's an outdated tax that needs to be scrapped?

On the other hand the tax books have to balance so where would the deficit be generated from? Wouldn't you rather tax dead people than pay extra income tax?

As much as it pains me to agree with the Express (although I must say that I agreed with The Observer first, when they ran a campaign last year ), I have to say that I do believe that Inheritance Tax should be abolished.

Basically, it's inherently unfair, because it's effectively penalising somebody for being successful in their life (in the majority of cases anyway). As you say Salu, people have already paid tax all their life but then, as a result of living in a nice house or whatever, their children effectivley get taxed on what their parents earned.

It would make more sense if the level rose in direct correlation with the housing market (which it doesn't anyway) but, as I say, it's unfair and should be scrapped.

Originally Posted by Salu

On the other hand the tax books have to balance so where would the deficit be generated from?

Just for once, I'd like to see the government find the money by saving costs in a way that doesn't disadvantage the rest of us.

Originally Posted by Salu

Wouldn't you rather tax dead people than pay extra income tax?

The thing is, the tax is not paid by dead people - it's taken from their estate, which by then - presumably - is then intended for those to whom the deceased has left their estate.

It is legalised theft - like much of taxation. We already pay income tax yet we also have to pay VAT. That means for every £1 I earn I actually get to spend about 60p - the rest the government takes. If I look at something like petrol or alcohol the situation is even worse.

Now if, in return, I actually got some public services, and maybe a decent pension, it might be considered fair. But as it is, when it comes to health I find the NHS leaves much to be desired, if it wasn't for private pensions we'd all face penury, and if you lose your job, then help is not so close at hand. And in respect of each of these, the higher rate tax payers are worse off than anyone.

[Aragorn]

I went to an inheritance tax seminar recently (with my mother) and they quoted Roy Jenkins as saying

Inheritance tax is a voluntary levy paid by those who hate their relatives more than the Inland Revenue.

There are ways of lessening the impact of IHT both before and after death (deed of variation), eg if one partner dies first they can leave up to the IHT limit in trust to their children without impacting the spouse. The solictors running this pointed out that for an outlay of hundreds of pounds a large estate can save over £100K in IHT!

Yes, it is an unreasonable tax but there are ways to get round most of it.

[TheBlueRaja]

Theft. Pure and simple theft.

And the trouble is there may be ways round it but who knows how to do that - not many and the ones that do tend to be the ones wealthy enough to know about it.

[Derek]

Originally Posted by TheBlueRaja

not many and the ones that do tend to be the ones wealthy enough to know about it.

Just like that program on BBC2 a few weeks back about lawyers specialising in tax avoidance where people earning shed loads of money paid miniscule amounts of tax through various loopholes and scams.

It would be interesting to see if there are any studies to what a flat-rate tax scheme would do in the UK.

Anything that puts accountants and lawyers out of business gets my vote

[skyblueheroes]

Whilst I think its unfair and the threshold should be managed and not just increased by RPI (or whatever it is), there are many ways that it can be avoided.

Like you say though, its normally the rich people who can afford accountants who do this.

[Ramrod]

I am completely against it. Yes, you can usually get around it if you are cool headed enough but many people have a hard enough time even making a will (facing their mortality etc....) let alone sort out inheritance tax.
We are taxed once already, why should tax be paid on that money once again?

Originally Posted by Ramrod

Yes, you can usually get around it if you are cool headed enough but many people have a hard enough time even making a will (facing their mortality etc....) let alone sort out inheritance tax.

In actual fact, if you do make a will, then if it's done properly the impact of inheritance tax is automatically addressed.

And getting your will written is not that expensive.

[Ramrod]

Originally Posted by ScaredWebWarrior

In actual fact, if you do make a will, then if it's done properly the impact of inheritance tax is automatically addressed.

And getting your will written is not that expensive.

I know all of that, it's just that many people don't even have a will (in spite of nagging families)

---------- Post added at 10:58 ---------- Previous post was at 10:58 ----------

Originally Posted by skyblueheroes

Like you say though, its normally the rich people who can afford accountants who do this.

Oy, some of us aren't rich but we need accountants anyway!

[Aragorn]

And even if you have a 'poorly' written will, your spouse can get it changed within two years if they realise there is going to be a problem with the children.

Note, there is no IHT between legal spouses, so the problem most often occurs when partner 1 leaves evrything to partner 2. When partner 2 dies and the combined estate is over 285K then you have a problem.

[danielf]

If inheritance tax were abolished income tax would go up. The books need to be balanced in some way. Same for VAT really. So, the argument that the money has already been taxed is pointless. Without inheritance tax the money would have been taxed at a higher rate.

[Rob]

All Tax is theft, theoretically for the common good.

Those who have the most money can afford to pay for people who find ways of avoiding it. Money always comes to those who have money.

Whilst this government continues, it is very unlikely that there will ever be any tax cuts, raised thresholds or abolitions. Simply put they have committed to throw money after money, despite much of that apparently not reaching the front line. Meanwhile protected pension commitments mean the books cannot be balanced.

[etccarmageddon]

Originally Posted by Salu

...Why should the government tax money that has already been taxed?...

that's a horse manure argument! I pay people for stuff at the local shops using money which has already been taxed - so what!

the issue is - why should this money be taxed - why should passing money to your kids on death be subject to a tax - it's not income so it's not been earned, it's capital - a gift - and as with all gifts, it should be free of tax.

---------- Post added at 11:23 ---------- Previous post was at 11:22 ----------

Originally Posted by Salu

...On the other hand the tax books have to balance so where would the deficit be generated from? Wouldn't you rather tax dead people than pay extra income tax?

all the paid for useless civil service and council jobs. 5 a day veggy advisors, lesbian and gay co-ordinators etc