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Inheritance tax
Newbie
Posted: 08 July 2024 22:04:46(UTC)
#30

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Robert D;311335 wrote:
My home is my tax haven is the old saying. It's free from IHT and CGT but is that right or fair? No, it isn't.. It's overdue for reform but it's also a political nettle and I cannot see any government willing to grab it.

You do realise that actual home ownership adds a fair chunk to the exchequer ?
Stamp duty, VAT, Income tax, Corporation tax from conveyancing, Capital gains tax, Income tax, VAT, Corporation tax etc from maintenance etc.

The alternative is for the state to provide all housing and charge rent. However I am pretty sure that when the exchequer raises the rent or other taxes associated with housing on a blanket coverage basis, we will soon have the same people who thought that same terms for everyone in order to make it fairer will be jumping up and down saying it is unfair.

IMO - focusing on the lowest hanging fruit, ie houses is not going to solve a lot. It needs to move further up the chain, ie land and land ownership. After all that is where the whole push towards taxation was introduced into the UK from India - In India prior to the EIC, though the land was technically owned by the kings, people who toiled it had the right to live and earn a means of stay from it and a small amount dependent on the output achieved after self sufficiency had to be paid to the king. This could be a share of crop/produce etc. In other words the land belonged to the people and it worked for centuries

However after the EIC went in, they made it that, regardless of output everyone had to pay a certain amount of tax/levy and this increased exponentially and at record pace. This also had to be paid in monetary terms as well as a proportion of crop (with rules on who could grow what - i.e regulations).
If the person or family could not pay the taxes/levy the land was transferred to someone else who could pay a larger monetary amount. This brought in large volumes of income to the EIC and its shareholders. At the same time it legitimised corruption in that wealthy. HM officials included and natives alike could become massive landowners, who later became the Zamindars and exploited the less wealthy further. It also brought about regulation and bureaucracy which could further be exploited with fines.

When this gig was yielding significant levels of income for the then EIC and later HM government (though the the treasure actually received very little as the officials has used it to buy land and influence in the UK and move into influential positions and power here in the UK) the officials brought this practice into the UK. However whereas in India everyone was technically a landowner, the same was not the case in the UK.

Here landowners were few but yielded a lot of power. So they decided to adopt the same technique but assigned the basis to something which everyone had, could have or needed to have "income". Thus Pitt the younger (whose family having made their fortune in India and then using it to navigate the political and social spheres including buying rotten boroughs, entering politics and eventually achieving the highest seat of Prime minster of the UK) introduced income tax into the UK in 1799.

Though guised as a temporary measure it never went away. Instead what it did was, ironically, keep the focus away from Land and the Land owning wealthy (the very measure it and the likes of Pitt the elder and similar ilk had used to loot the poor in India) in the UK.

Have you ever wondered why much of the land in the UK despite the sophisticated systems and measures is not actually registered in the central systems. Again this goes back to the old times where, in order to evade the risk of losing their land by means of paying extortionate levies taxes, native Indians began to slowly not declare change of ownership, especially where family members passed away (there was not IHT). Similarly in the UK the wealthy seeing this and learning from it, do not register their lands, instead they chose to deal with ownership within themselves and the various instruments which serves them better.

In fact I know of 4 families in my town where home ownership has passed down three generation but the main houses are not in the central land registry. There is no desire to get it in either, instead the families have amongst them sorted out the estates in a amicable manner amongst them. There are two other estates that are wrapped around trusts and the multiple properties and various parcels of land within the trust do not get to feature in the land registry either.

Nevertheless by focusing on Land ownership rather than houses, especially where developers buy it, then hold on to it, creating pent up demand, by controlling supply, in turn raising prices for both property and the land, may lead to both more houses and more home ownership.

So whilst IHT capture as small proportion of people, land tax would IMO raise a lot more and soon see a shift in attitudes.
2 users thanked Newbie for this post.
Vince. on 08/07/2024(UTC), john brace on 09/07/2024(UTC)
Mostly Retired
Posted: 09 July 2024 06:01:24(UTC)
#41

Joined: 24/04/2012(UTC)
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Back in the 18th century a french school of economics emerged, broadly labelled "Physiocracy". A key central tenet was that land was the source of all wealth. Their beliefs in part gave rise to the creation of the French Land Tax introduced in 1790 by the Revolutionary Constituent Assembly.

According to Land Registry circa 89% of land in the UK is registered. However, some of the unregistered land is due to people who bought a house before 1990 and never moved or remortgaged. Off topic - My mother in law is in that position at the grand age of 95 and it is a nightmare to get the data to complete a registration when her memory and paper work records are all failing!
Robert D
Posted: 09 July 2024 08:00:14(UTC)
#32

Joined: 06/11/2016(UTC)
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ANDREW FOSTER;311337 wrote:


What 'reforms' would you have in mind?

Problem with IHT is its paid by the frugle and avoided by the profligate.... How is that right or fair?




IHT is a voluntary tax - it's easily avoided with a little planning.
D Bergman
Posted: 09 July 2024 08:19:42(UTC)
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Robert D;311358 wrote:


IHT is a voluntary tax - it's easily avoided with a little planning.


Not if you live in London!
Semi-detached house in SW London, 30-foot garden, very mixed area near the Tube, current value about £2.2M.
And that's before you calculate any savings/investments

I'm not complaining - just stating.
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Jay P on 09/07/2024(UTC), Guest on 09/07/2024(UTC)
Neminem Laedit
Posted: 09 July 2024 08:31:47(UTC)
#38

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Robert D;311358 wrote:
ANDREW FOSTER;311337 wrote:


What 'reforms' would you have in mind?

Problem with IHT is its paid by the frugle and avoided by the profligate.... How is that right or fair?




IHT is a voluntary tax - it's easily avoided with a little planning.


And so it tends to fall on the uninformed, the reticent, the elderly, the ill...
5 users thanked Neminem Laedit for this post.
john brace on 09/07/2024(UTC), Jay P on 09/07/2024(UTC), Toadfish on 09/07/2024(UTC), Guest on 09/07/2024(UTC), Dentmaster on 09/07/2024(UTC)
Dexi
Posted: 09 July 2024 09:41:14(UTC)
#40

Joined: 03/04/2018(UTC)
Posts: 1,752

Robert D;311335 wrote:
My home is my tax haven is the old saying. It's free from IHT and CGT



Yes , no CGT on domestic residences ( yet ) but as for IHT , I think there are allowances , eg . £ 175 k to leave to a child , and no tax on inheritance by a spouse , but beyond this , the value of a house would be included in the estate for IHT purposes .
If this were not the case , just buying an expensive property would be an easy way to avoid IHT .
Toadfish
Posted: 09 July 2024 09:55:31(UTC)
#33

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Robert D;311358 wrote:
ANDREW FOSTER;311337 wrote:





IHT is a voluntary tax - it's easily avoided with a little planning.



Rubbish, if you're single with no children, you're not only screwed but discriminated against...

EDIT: A family of 2.4 can pass on up to a million, a single person can only pass on £325k. My two bed flat, in the farthest outreach of greater London, blows that out of the water (very little capital gain) meaning everything else I've saved gets hit.

Really annoys me the state thinks they can take the money I've earned and paid tax on already. I'm hoping to give my money to a friends young daughters as they don't have much themselves, I'll decide who to distribute my money to not the corrupt politicians thanks (rant over).
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Lindisfarne on 09/07/2024(UTC), Keith Cobby on 09/07/2024(UTC), Guest on 09/07/2024(UTC), Raj K on 09/07/2024(UTC), Wave Action on 09/07/2024(UTC), Martina on 09/07/2024(UTC), john brace on 09/07/2024(UTC), Jay P on 09/07/2024(UTC), Dentmaster on 09/07/2024(UTC), Mostly Retired on 09/07/2024(UTC)
NoMoreKickingCans
Posted: 09 July 2024 10:13:43(UTC)
#42

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Quote:
IHT is a voluntary tax - it's easily avoided with a little planning.

See this often said but I don’t think it is ‘easily’ avoided. In reality it requires whole families including old people worried about their financial security to work selflessly together - not going to happen.
Avoiding it requires giving assets away - not going to happen.
If everyone in the family is a well off multimillionaire with a high retirement income I am sure expensive solicitors can set up trusts etc. But for the ordinary person with 1-2million much of it in a single property far less easy.

These days being a millionaire on paper is a very long way from ‘rich’ but of course labour are happy to tell the least well off that ‘rich millionaires’ should be taxed to their benefit. Even though every labour politician is themselves busily enriching themselves by all means possible - from Tony ‘satan incarnate’ Blair, through 2 jags Prescott, Starmer and his special DPP pension, and all the others.
3 users thanked NoMoreKickingCans for this post.
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Robert D
Posted: 09 July 2024 10:14:30(UTC)
#34

Joined: 06/11/2016(UTC)
Posts: 1,481

Toadfish;311370 wrote:
Robert D;311358 wrote:
ANDREW FOSTER;311337 wrote:





IHT is a voluntary tax - it's easily avoided with a little planning.



Rubbish, if you're single with no children, you're not only screwed but discriminated against...

EDIT: A family of 2.4 can pass on up to a million, a single person can only pass on £325k. My two bed flat, in the farthest outreach of greater London, blows that out of the water (very little capital gain) meaning everything else I've saved gets hit.

Really annoys me the state thinks they can take the money I've earned and paid tax on already. I'm hoping to give my money to a friends young daughters as they don't have much themselves, I'll decide who to distribute my money to not the corrupt politicians thanks (rant over).



Move to a cheaper area or downsize, release equity and hand the money over in the girls' lifetimes - which I'm sure they'd appreciate more than when you'd passed away, plus it would give you more pleasure - or donate the money to good causes and/or charities.. The joy of givjng. Alternatively spend the money and treat yourself. Why sit on an asset when you don't need the money? If you don't need it get rid of it
Keith Cobby
Posted: 09 July 2024 10:38:07(UTC)
#43

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I don't see why peoples' 'stuff' should be taxed. What anybody does with their own money should be up to them, buy property or gamble it away. If the Tories had abolished inheritance tax, they wouldn't be in their present predicament. It's also grossly unfair as Toadfish says, the level is very low and the rate very high (many people pay a higher tax rate when dead than alive).
5 users thanked Keith Cobby for this post.
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