Inheritance tax spin

[lornemalvo]

We are forewarned that IHT is about to be increased in some way. Many "educated" commentators seem to think that this is fine "as it affects only 4% of people. I don't see how this is possible, The threshold, I believe, is £325,000. The average house price in the UK is £293,000 and the average price in the South East is £466,000. Most people will have car/s, savings etc etc. on top of this. I find it inconceivable that only 4% of people are affected by this awful tax.

Having left school at 15 with no qualifications and with lifelong hard work and almost lifelong study, I am comfortable but not rich. It upsets me to think I can't leave what I grafted for to my kids.

[Andy 308GTB]

Google is your friend.
Most married couples will end up with a £1mio threshold

[LastPoster]

The threshold can be much higher

[Mr E]

IHT if there’s a house going to kids is 500k per individual. So 1m for a couple of parents.

That such a low percentage of estates pay it suggest it’s avoidable for a large number of instances.

[vixen1700]

I could be wrong, but I thought if a property was left directly to a son or daughter then the amount was raised to £500k.

Even so, not sure how only 4% are effected by this. especially those living in tbe South East.

Maybe the accountants can explain in nice easily digestible language.

[MesoForm]

vixen1700 said:

I could be wrong, but I thought if a property was left directly to a son or daughter then the amount was raised to £500k.

Even so, not sure how only 4% are effected by this. especially those living in tbe South East.

Maybe the accountants can explain in nice easily digestible language.

I think the people that benefitted most from house price rises aren't dead yet

[lornemalvo]

To be honest, I'm also hoping for some educated advice on how to avoid the problem. No doubt Rachel Thieves will not make it any easier.

[2xChevrons]

Edit: Apparently the tone of the thread has gone off in a different direction - post retracted. Not the time or place.

[Shooter McGavin]

"Downsize and gift most of it away at least 7 years before you die" is the straightforward answer to that.

However I'm not sure how many people actually do that, even if they are able to.

[J4CKO]

Shooter McGavin said:

"Downsize and gift most of it away at least 7 years before you die" is the straightforward answer to that.

However I'm not sure how many people actually do that, even if they are able to.

They do but its not always that easy, and there is the possibility she extends it to ten years, and increases the percentage, lowers or abolishes the tax free bit.

People need to hand wealth down and put it in their beneficiaries names, to get it out of the way of IHT, but maybe have some arrangement to get it back, in part of they need it.

I am sure they would love to just grab the lot, would be interesting to see what would happen to society in that scenario, how's it done in other countries ? Believe Japans is quite aggressive.

[StevieBee]

lornemalvo said:

To be honest, I'm also hoping for some educated advice on how to avoid the problem. No doubt Rachel Thieves will not make it any easier.

1. If they are not already, encourage your children to get married.

2. Find yourself a decent financial advisor and start the planning early.

You can also give each of your children £3k a year tax-free so assuming you live another 10 years, that's £30k they each get outside of IHT - more options exist for grandchildren. Of course this all assumes liquidity (cash in the bank rather than bricks and mortar).

[Dave Hedgehog]

i thought putting it in trust for 7 years before death avoided IT?

[119]

You can pass a home to your husband, wife or civil partner when you die. There’s no Inheritance Tax to pay if you do this.

If you leave the home to another person in your will, it counts towards the value of the estate.

If you own your home (or a share in it) your tax-free threshold can increase to £500,000 if:

you leave it to your children (including adopted, foster or stepchildren) or grandchildren
your estate is worth less than £2 million

[omniflow]

lornemalvo said:

We are forewarned that IHT is about to be increased in some way. Many "educated" commentators seem to think that this is fine "as it affects only 4% of people. I don't see how this is possible, The threshold, I believe, is £325,000. The average house price in the UK is £293,000 and the average price in the South East is £466,000. Most people will have car/s, savings etc etc. on top of this. I find it inconceivable that only 4% of people are affected by this awful tax.

Having left school at 15 with no qualifications and with lifelong hard work and almost lifelong study, I am comfortable but not rich. It upsets me to think I can't leave what I grafted for to my kids.

The article that I read mentioned focusing on business and agricultural relief. My understanding is that these two "loopholes" are mostly used by the very wealthy to avoid IHT and closing them will not impact the average person in the slightest.

Also (as mentioned above) - there is no IHT to pay between married couples and the surviving spouse inherits their deceased spouse's IHT allowances. If the house is left to direct descendants (e.g. children), then the overall allowance for passing things on to the next generation is £1,000,000.

[bennno]

Dave Hedgehog said:

i thought putting it in trust for 7 years before death avoided IT?

mixing things up there, trust potentially exempts things but Thieves is looking at that

7 years is the gifting rule, again Thieves is supposedly extending that

[Dog Star]

Shooter McGavin said:

"Downsize and gift most of it away at least 7 years before you die" is the straightforward answer to that.

However I'm not sure how many people actually do that, even if they are able to.

This is the issue with my parents; quite affluent with multiple properties but for some utterly unfounded reasons they don’t appear to trust me at all, despite never having had one penny of assistance/support etc from them in my adult life. I’m not even allowed to drive their 15 year old Yaris because I’ll “rev the engine” and “you have a racing driver mentality” oh and I’m not allowed to use their caravan either as “you will get drunk and vomit in it”

They’re in their 80s and given the 7 year thing it’s probably too late now. The crazy thing is that they are a proper pair of Kippers, raving about immigrants and “deadlegs”; it’s sort of ironic that they are going to end up unnecessarily leaving a significant amount of money to the government to spend on these exact things. Nowt so queer as folk.

[lornemalvo]

Shooter McGavin said:

"Downsize and gift most of it away at least 7 years before you die" is the straightforward answer to that.

However I'm not sure how many people actually do that, even if they are able to.

Don't want to downsize. My daughter still lives with us and runs a business from home as well, which would not be easy to move. It's also not easy to gift something you worked for 60 years to achieve, There are further complications. If she got married while we still lived there, he immediately gets 50 % of the property. If the marriage fails, major complications. Perhaps an unlikely scenario, but possible.

[L1OFF]

The late Duke of Westminster left a £14B estate, IHT = £0.

[Derek Smith]

Shooter McGavin said:

"Downsize and gift most of it away at least 7 years before you die" is the straightforward answer to that.

However I'm not sure how many people actually do that, even if they are able to.

I know of a woman, a widow, who gave her home away a dozen or so years before she died with the caveat that her son, who inherited, kept her in the manner she had grown accustomed. I don't know the details as I didn't listen. He was always complaining of the on-costs, what with rates and such, plus taxis, her cruises and such, but he considerately did not allow anyone else to take a percentage of the inheritance for a percentage of the costs. He was thoughtful that way. We had lost contact by the time his mother died. I sort of hoped she gave the rest of her property to the family members who hadn't moaned.

[Sheepshanks]

Dog Star said:

They’re in their 80s and given the 7 year thing it’s probably too late now. The crazy thing is that they are a proper pair of Kippers, raving about immigrants and “deadlegs”; it’s sort of ironic that they are going to end up unnecessarily leaving a significant amount of money to the government to spend on these exact things. Nowt so queer as folk.

Stick them in a home - that'll get rid of the money at a satisfying rate!