Inheritance Tax

[naomi24]

If elected, the Conservatives propose to raise the threshold to �1,000,000. Is this right, or should the level be left as it is - or should the tax be scrapped atogether?

[Whickerman]

scrapped. If you inherit your family's home, they paid tax to earn the payments. If you get some cash, they paid tax as they earned it.

[ruby27]

In terms of taxation I think you view pretty much sits with your view on the provision of public services. As someone with a left wing political viewpoint, I consider the public services should be funded by a robust taxation system. Those who can afford to pay should. Yes, even when they don�t need the services, I fully support that my earnings should pay for state education although I will never reap the reward. I also think much of taxation should be graded so the more you can afford the more you can pay.

Informing my opinions is the Guardian Newspaper and I have lifted parts which support in my view why the taxation threshold should not be increased
To raise the threshold to �1m reduces the number of estates that will ever pay a penny from 6%, the pretty rich - to 1%, the very rich. A politics department seminar in Oxford gathered all the recent evidence on public attitudes, and concluded that people don't understand how inheritance tax works, vastly overestimate how many will pay and hold a instinctive conviction that it's unfair.

As house prices rise, more people fear that their estate will hit the �350,000 level; 37% of estates are now worth over �350,000 (homes, pensions, cash), so if everyone died today then 37% of estates would be liable. But everyone is not going to die today. According to Carl Emmerson of the Institute for Fiscal Studies, by the time people grow old and die they have divested themselves of money, giving it away when children and grandchildren need it, downsizing their homes to spend on cruising, enhancing their pensions or going into long-term care. That's why only the richest 6% ever end up with enough money to pay IHT.

So if we reduce taxation, equals less revenue generated, equals less money to spend on public services. Less to education, police, roads and by ways, refuse collection , fire service, hospitals, elderly service provision, services for those with disabilities etc etc.

[Loosehead]

Historically IHT was intended for the rich, like a lot of things the thresholds over time where allowed to lower so that more and more are caught by the tax. Same thing happenned with stamnp duty and even the higher rate income tax threshold. Moving the threshold to �1m is simply restoring the old ratio of those who paid IHT to to those who don't. Having said that though I do find it abhorrent that we pay tax all our lives and even in death the government seeks to take it's pound of flesh.

[naomi24]

Ruby, are you speaking to Whicker, or to me, when you say "In terms of taxation I think your view pretty much sits with your view on the provision of public services"? If it's me you're addressing, what view would that be then?

[jake-the-peg]

Historically Income tax was intended to fund the Napoleonic wars - so what?

Nobody likes any form of tax. Cutting or reducing taxes only make sense if you discuss at the same time how it'll be funded.

So the real point is
a) Can you make enough money to fund it from "non-Doms"?
b) Is this the absolute best use that that money could be put to?

[Sweep2k]

Ruby, are you speaking to Whicker, or to me, when you say "In terms of taxation I think your view pretty much sits with your view on the provision of public services"?

naomi, I think she means "your" as in "one's".

[LoftyLottie]

I share Ruby's views on inheritance tax. I believe it should exist. However, I believe it should be inflation linked on a yearly basis and that �1,000,000 is probably about right initially to rectify the years that it has stayed the same.

Yes, it is double taxation, and as such seems unfair, but I don't know how this could be rectified?

[ludwig]

Agree with Loosehead and LoftyLottie.

Jake, you probably believe all property is theft or some such nonsense. Of course it's not the best use the money could be put to. You probably spent 500 quid on your computer - was that the best use of that money? - shouldn't you have paid to restore a child's sight or something? - come on cough it up you evil capitalist you.

[jake-the-peg]

No I don't Ludwig but I also don'y buy the double taxation thing.

My Employer earns money and pays corporation tax and then pays me and pays NI and I pay NI and tax and I buy Petrol whic is taxed etc.

The principlal of multiple taxation has been around a long time and isn't specific to IHT.

Also inheritance is "unearned income" by the beneficary - it's a windfall and we have a long established principal of taxing unearned income.

So I don't think there's a good argument for scrapping it entirely.

Like I said nobody likes tax and we can all go around saying scrap this or that tax but without saying how you'll pay for it it's just pub talk.

Real politicians have to make the books balance.

Lets say Cameron gets in and raises the money from non-doms (both of which are big ifs)

He has choices give tax cuts to people who have just inherited over a quarter of a million pounds or put the money into schools.

But then he and most of his cabinet all went to Eaton so I'm not convinced public schooling is high on his agenda

[Maggoty]

Inheritence Tax is known as the voluntary tax - there are ways around paying anything. The threshold is 300K and then taxed at 40% above that.

My father has just died leaving everything to mum (no IHT at all if left to a spuse) so my bro and I are now sorting her finances out as she wants to leave all her money to us - and not to the govt. We have seen an IFA and it really is quite simple with trust funds etc. The only drawback is that obviously there is a charge for some of these schemes.

If IHT stays (and I'm sure the tories won't scrap it totally - prob bring out a different type of tax in its stead) then I agree it must be raised. More people own their homes these days and �300K is too low to take that into account.

[naomi24]

Sweep, Ah, yes. That could be it. That didn't occur to me. Thanks.

[naomi24]

I completely agree with Whicker. I've no objection to paying my taxes and contributing towards the welfare state, but having said that I can understand those who, long before death, transfer their property to their children to avoid paying inheritance tax, or who downsize to spend their retirement holidaying. Rather that than see the fruits of a lifetime of labour spent on sending yobs on holidays by way of 'punishment' for their crimes, on keeping people who will not work, or on paying benefits to immigrants for children living overseas - some of whom may not exist.

People who've worked and saved shouldn't be penalised on death. They've surely done their bit for the system throughout their lives - and if our taxes were more sensibly spent, and less money thrown down the drain, the shortfall caused by the abolition of inheritance tax would very soon be realised.

[ruby27]

naomi24, Sweep2k has answered your question in relation to my response

Sweep2k
thank you. I have never been able to understand the grammatical rules of written English, so I often am incomprehensible; fortunately you got the gist of what I was trying to say.

[Pippa68]

IT is daylight robbery.

I agree with Looseheads post.

[naomi24]

Thanks Ruby.

[jedimistress]

The fact it is being raised to a million will not affect many people, just his richer constituents. I'd rather the tax stayed and was levied against the deceased rather than the living. Plus if there is large sums of money and estate, then they can afford the tax.

It is double taxation but if the Revenue was not generated here, it would just be generated elsehwere...where?

Unfortunately Fixed Penalty Notices for trivial matters seem to be the way forward for revenue generation.