Inheritance tax

I doubt if it will succeed....to make matters worse people believe wrongly that if you give a gift and die within 3 to 7 years that you get stepped relief which only applies if you are very rich and have cumulative gifts in

Irrelevant Each generation makes use of services provided by the government. So each generation has to pay some kind of contribution.

The taxes your grandfather paid were used to pay for the services he obtained. Who do you think should pay for the services provided to heirs who pay no or only very little regular taxes on income?

"....to make matters worse people believe wrongly that if you give a gift and die within 3 to 7 years that you get stepped relief... "

yes I agree , you even see this error printed in newspaper demstic finance pages . it's the tax that is tapered not the gift and the tax is zero unless you give away more than 1/4 million or so.

Robert

"Real Name" wrote

Do you think that people should pay taxes in relation to the (public) services that they receive themselves?

Eg - don't use the NHS, get a discount on taxes payable? Don't have any brats [no "education" required], get another discount? No street lighting down your road - another discount? ...

Garbage. If your grandfather accumulated excess capital then he would also have paid more than his fair share of tax. It could be argued that he either paid too much tax or he pre-paid tax for his heirs.

Furthermore the very rich usually can afford avoidance schemes with the result that only the estates of the ordinary punter pay the tax because they have chosen to buy their own house

We fought for 80 years to destroy communism and yet we elect 'leaders' who tax capital at every opportunity. Look at the national savings and you can see the effect of this sort of 'thinking'.

Does not need to be always exactly in relation to the public services that they receive, but they have to pay to allow the government to pay for services.

Imagine a rich country without wars or economic problems. The number of heirs will increase and they will refuse to pay (regular income) tax because ?grandfather paid already tax for all I own?. On the other hand the number of working people will decrease.

Again: Who do you think should pay for the services provided by the government? No one? The other ones, as usual? Stop all services? The government itself?

No matter whether fair or unfair, it just does not work this way.

Sorry, but I have never seen a budget of a government showing "Prepaid taxes saved for future generations"

Again: Who do you think should pay for the services provided by the government?

All brats require education, and since we've all been brats ourselves at some point (except those of us who were born grumpy old men), it makes sense that we should all share the burden of paying for it. The obvious way is to think of ourselves as paying retrospectively, through our taxes, for our *own* education, not that of the brats we might or might not have.

Then he paid too much tax and he paid tax twice: once on the original income and again on the inheritance

No-one should be taxed twice. If your goal is to destroy capital (and remove the incentive for savings) then you will tax capital. If your goal is to build national savings and build wealth then you will tax consumption.

Future generations, of course. Meanwhile, the government borrows from the present generation, and pays it back just as the future generation coughs up, just in time for the present generation to die off, leaving the paid-back borrowings to be inherited by the future generation, so that they can afford the taxes they've just paid.

It's all an illusion anyway, there is no such thing as real money any more, it's just something the government makes up to keep us all amused, or perhaps I should say bemused.

That is exactly how inheritance tax works The deceased was taxed once on what he earned and saved The heir is taxed once on the heritage he earned

If levels were raised then he wouldn't get any cash when house prices fall.

Maybe inheritance tax should be somehow linked to average house price (given that for most people the house will be their biggest asset when they die)

and also because it raises a tiny amout of money and there is no scope for income transfer (as there is with CGT).

Not much chance IMHO.

In message , B J Foster writes

Not necessarily. Cpaital gains Tax and its predecessors was introduced to get tax of those who converted the 'income' into 'gains' to avoid tax. Much Capital is acquired by virtue of Capital Gain and until disposal is tax free. IHT is just a Capital tax applied at death and can easily be incurred by those who have paid no income tax in lifetime.

"Real Name" wrote

How did the heir "earn" it? :-(

It is "income" for the heir since he did not own it before. Reason and source do not matter much for taxation.

Or in other words: It is capital, as long it is owned by the person who earned it. The moment it changes hands it starts again as being "income". Only after taxation it becomes "capital".

Otherwise there would be no income since all kind of property would become capital after first taxation.

How about writing on each banknote earned "earned money, tax paid"? Next time someone earns said banknote he can't be taxed because "this time it's not earning, now it's capital which has already been taxed".

And Tony Blair should not pay income tax since he is paid from taxes eg "money already taxed".

No.

Income tax is a tax on "remuneration" for work done or services provided, on a personal not corporate basis. The implication being it is continual.

But there's no tax on "capital". Yet !

But there is substantial taxation on capital transfers, and inflation has ensured that inheritancies which include small properties come quite within the bracket within which inheritance tax becomes payable.

:-((

Too Silly.

DG

No it isn't. Inheritance tax is paid by the estate.

He already escapes much that you and I would declare on P11Ds.

ISTR Sweden once decided that their PM should be taxed on the BIK he got from the PM's Official Residence, but they dropped the idea when they calculated that 'market rate' for rental on the palace was twice his official salary...

Other gedanken numbers: The cost of an private pension pot equal to Gordon Brown's. The amount of corporation tax EDS/Accenture/et al pay to the UK Treasury out of their profits on uk.gov systems.

rgds, Alan