Inheritance Tax

My wife and I are approaching the normal age for retirement. I have taken early retirement. Neither of us make any claim on direct State benefits or tax credits. Neither of us has inherited wealth. We have both paid into our employers' pension schemes. We bought a fairly average flat at a time when the cost and high interest rates made it difficult to do so. We have, over many years, saved, and tried to make further investments to ensure we have independence and choices in our old age. Under New Labour, our pension scheme gains are taxed. My modest pension is, subject to a small personal allowance, taxed as 'earned income'. The main benefit under our equity-based 'tax-free' PEPs and ISAs is now taxed. The interest on our cash savings is taxed, reducing the gains to less than the erosion in value caused by the real rate of inflation. Council tax increases inexorably at a rate greater than my 'inflation-proof' pension. The Treasury has skimmed money from the Premium Bond Prize Fund, reducing our income from this to below the inflation rate. The prudent essentials of life, such as the insurance premium on our home, are taxed. Essential repairs to our roof are taxed at the same level as our young neighbour's luxury home extension. New Labour now exhort us to work longer and make more provision for our future, yet continue to tax every form of investment. Despite this, we have made some progress in providing for ourselves. Should I die, rather than require the money for my old age, my wife will inherit it all. If she doesn't go wild with the money, but keeps it to provide for her own needs, then her early death will result in us being rewarded with an inheritance tax bill of £120,000+. This amount will go to the Treasury, rather than to our nominated beneficiaries to provide independence and choices for them, and to ensure they do not need state benefits. The Treasury will use this tax income to fund minimum income guarantees and pension tax credits for those who earned the same as us, but did not save, invest, or buy a pension, but ate out more often, went on more foreign holidays, and traded-in the car each year for the latest model. This tax is, for ordinary people attempting to be independent and provide for themselves, punitive and iniquitous.

Toom

Reply to
Toom Tabard
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This tax is, for ordinary people attempting to be independent and provide for themselves, punitive and iniquitous.

Toom

So which taxes would you raise instead or which spending would you cut ?

Reply to
Miss L. Toe

We could save a few billions by bringing our troops back home and letting other countries do their share. That would svae a few British lives too.

Reply to
bluenep27

Only if we then dismissed them from the Army and paid them dole money instead.

And, trying hard not to be disrespectful to many brave and valiant young men, many of the troops are young tough single men and guess where they would end up Friday and Saturday nights.....

Reply to
Miss L. Toe

Home or abroad, they still have to be paid & trained.

As a fan of the Swedish model (ie tax 'em till it hurts, then a bit more) I have nothing to complain about in the UK. Running a country costs serious money, and no matter what any politician of any flavour ever promises, the overall tax burden (as a proportion of income) never shifts very far one way or another.

My only complaint at the moment is that nobody's had the courage to roll NI and Tax into one. It's all the same really. As for inheritance tax, any tax you get to pay after you die has to be a great thing.

Andrew McP

Reply to
Andrew MacPherson

Er, no, the cost of keeping them overseas is a lot higher than when training or in home base even in straight pay quite apart from the huge costs in feeding and supplying them. so considerable savings would be made.

Jim.

Reply to
Jim Ley

Because the hoi polloi will start agitating when they see the rich man in his castle only paying 41% while they are paying 33%. (If you roll in employers contributions as well it's something like 48% against 41%)

It would also mean having to give much more back via pension contributions to the working classes. At the moment the richer get (almost) all their tax refunded while the poorer only get 2/3.

The system is carefully designed to look fair while being as beneficial as possible to the more wealthy.

Similar thing with capital gains tax. Why is there an additional 8800? allowance for those who are fortunate enough to have large sums to invest. How many basic rate taxpayers can there be that can use up their CGT allowance each year?

I'd also expect that VAT as a proportion of income falls disproportionately on the less well off.

(I'm not complaining; the system has done me very well thankyou. But I do think the system is unfair)

Tim.

Reply to
google

I think the problem is that everybody agrees that a fair tax is one 'I' don't have to pay :-)

Maybe IHT is the only fair tax because only the dead pay it, and it does only tax the rich. If they raise IHT to 80% and close the loopholes, maybe they can bring some of the taxes down that 'I' pay.

Reply to
Miss L. Toe

I'd just add that the only tax I can think of that doesn't work like this is inheritance tax.

Why isn't the IHT allowance for the recipient and the recipient taxed instead of the allowance being on the estate and the estate taxed?

I can't get worked up about inheritance tax though. I don't really understand why people think they have a right to inherit anything at all. Taxing estates at 100% would probably encourage a lot more bequests to charities and institutions. (I can understand wives, husbands and dependent children being treated differently)

Think it was Isaac Asimov, "The only people who inherit anything by right of birth are congential idiots."

Tim.

Reply to
google

Erm, not sure I'd agree there. While nobody likes paying tax and will take every legal avenue to reduce their tax bill, I'd think a lot of the people I associate with accept that it's required and generally pay the tax they owe. (Never actually asked whether they think it is fair and, if not, which way it should be adjusted though :-) )

Tax is a subscription to a civilized society.

Tim.

Reply to
google

I've wrestled with this one, but I can't think of a better way of taxing what is mainly discretionary spending, especially now working tax credits and assorted benefits go some way towards buffering the low paid.

Andrew McP

Reply to
Andrew MacPherson

The old system of a higher luxury rate of VAT on 'luxury' items seemed reasonably fair to me.

But can we agree what luxuries are ?

Reply to
Miss L. Toe

If only we had one, more of us would subscribe willingly instead of having to be compelled to.

Reply to
Ronald Raygun

because that means that people then dont have a right to give what they want to others without the state interfering. I'm sure many people want to havea right to inherit, but many (most?) people want to have a right to leave possessions to particular recipients as well.

Reply to
Tumbleweed

They can give whatever they like to whoever they want. What I don't understand is why people think they should have a right to decide what happens to their possessions when the only reason they are giving them away is because they can't possibly use them themselves.

(Obviously I make a distinction between those who were already benefiting from the estate and those who are only benefiting because of the death. I think husbands, wives, dependent children have every moral right to inherit everything)

I'm not arguing that inheritance should be done away with, just that I can't understand the righteous indignation of people who complain about "their inheritance" being spent on nursing homes etc.

I'm delighted that my parents are enjoying their retirement and spending some of what they have saved up over the years. I won't turn it down if there is something for me to inherit when they die but I'm relieved that isn't going to be preceded by "I wish we had done XYZ while we were fit enough but we wanted to save something for your inheritance".

Tim.

Reply to
google

We can, I hope, agree that essential roof repairs and painting my windows to maintain them from rotting are not luxuries. When my

12-year-old washing machine finally dies, it is not clear whether a bog-standard replacement is a luxury. I don't think it is, but maybe we should be expected to go down to the river and bash our laundry on the rocks. But if too many of us opted for that, they would probably impose a rock tax.

Toom

Reply to
Toom Tabard

It's not a matter of a right to inherit, though there are those who think the rest of us should pay for the long-term care of their aged parents, so that they can inherit the house and all the savings.

It is a matter of whether the wealth of individuals should be disposed of as directed by them. There is a problem if we require people quite reasonably to fund their own retirement. Few of us know in advance if we require many hundreds of thousands to pay for 30 years retirement, or only need tuppence until we drop dead later today. If I, because my values are not material, have accumulated saving from taxed earnings, and invested them and paid the tax on the investments, and am prepared to look after myself, and don't qualify for benefits because I accumulated these resources, then I have some difficulty with the notion that, should I die soon, £120,000 should go to the government rather than be distributed according to my wishes. We're not talking vast wealth here, just people making reasonable provision to maintain independence. That is, however, a matter of attitude to personal responsibility and accountability.

Toom

Reply to
Toom Tabard

. If I, because my values are not material, have accumulated saving from taxed earnings, and invested them and paid the tax on the investments, and am prepared to look after myself, and don't qualify for benefits because I accumulated these resources, then I have some difficulty with the notion that, should I die soon, 120,000 should go to the government rather than be distributed according to my wishes. Toom

Why is that any different to paying the mortgage for years out of taxable income, then having to pay council tax based of the value of ones home ?

Reply to
Miss L. Toe

"If I, because my values are not material, have accumulated saving from taxed earnings, and invested them and paid the tax on the investments, and am prepared to look after myself, and don't qualify for benefits because I accumulated these resources, then I have some difficulty with the notion that, should I die soon, 120,000 should go to the government rather than be distributed according to my wishes."

But it is being distributed according to your wishes. It's just that the recipients (effectively) are having to pay tax on their windfall.

Seems fair enough, especially as they typically pay far less than those of us who have to work for what monies we receive!

Jeff

Reply to
Jeff

eh?

"I don't really understand why people think they have a right to inherit anything at all."

and;

"I think husbands, wives, dependent children have every moral right to inherit everything"

and even in the same paragraph... "They can give whatever they like to whoever they want" and; "why (do) people think they should have a right to decide what happens to their possessions"

Reply to
Tumbleweed

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