Inheritance tax ...

[Brigadier]

Being financially prudent often means you get shafted when others don't.

Another way to look at it is that the "financially prudent" person did less to help the wider economy, than the profligate person.

 

[denso13]

There's a big difference between someone who's never earned much nor saved compared to someone who has, however they elected to 'spend it as they earned it' rather than be financially prudent.

I'm only making the obvious point that society can chose how to spend the tax take in whatever way it wants, nothing is free though, If we choose to make care home living free for all then someone else still has to pay.

 

[denso13]

however they elected to 'spend it as they earned it' rather than be financially prudent.

They are perhaps following your advice,

My advice to anyone with a degree of money whether savings, property or investments is to get it spent and/or given to whoever you desire before it gets used for stuff others aren't paying for.

 

[Lower]

It's not the same person paying the tax "again" at death. It's unearned income for somebody.

Not saying it's right, or wrong, but we need taxes. Maybe the limit needs an increase, or a bigger allowance in different areas (controversial).

Any better options for tax income? Every body is already complaining they are paying too much tax on regular income

It is the same as paying the tax again, because it's the estate of the deceased that pays the tax, not the beneficiary. Unlike personal taxes, the income tax status of the person receiving the benefit of the estate is not considered in the inheritance tax calculation.

Whether it's unearned income or not, it's a tax on income that has already been assessed and potentially incurred tax by the person that generated the estate.

It seems particularly unfair that if you save to leave something for others or avoid being a drain on the state in old age, it's then liable for inheritance tax. Unlike those who don't save and spend everything and then end up being supported by the state and who ultimately pay less tax.

 

[carmanmemoranda]

It is the same as paying the tax again, because it's the estate of the deceased that pays the tax, not the beneficiary. Unlike personal taxes, the income tax status of the person receiving the benefit of the estate is not considered in the inheritance tax calculation.

Whether it's unearned income or not, it's a tax on income that has already been assessed and potentially incurred tax by the person that generated the estate.

It seems particularly unfair that if you save to leave something for others or avoid being a drain on the state in old age, it's then liable for inheritance tax. Unlike those who don't save and spend everything and then end up being supported by the state and who ultimately pay less tax.

I get your point, but if it was handed down to for the recipient to pay, it's still the same end result.

Where else do you think the tax should come from?

 

[Brigadier]

Unlike those who don't save and spend everything and then end up being supported by the state and who ultimately pay less tax.

Do they though?


It's those who squirrel money away (especially in tax-efficient ways) that pay less in tax, is it not?

 

[Lower]

Taxation is, among other things, a tool with which to encourage / discourage behaviours.
Cigarettes being taxed at c. 80%, while non-tobacco nicotine products are taxed at c. 20%.
As behaviours change, the need for tax as a driver to change that previous behaviour changes and so, the level of taxation might increase or decrease.



If your sole goal is to minimise - legally - your tax obligations, choose wisely how and where you spend your money.

Ironic, that inheritance tax and care support funding rules encourage you to spend your money and be funded by the state rather than provide for yourself and your family.

 

[Lower]

I get your point, but if it was handed down to for the recipient to pay, it's still the same end result.

Where else do you think the tax should come from?

I think wherever taxation is applied, it should only be applied once. So it should all go on income tax or similar. VAT is a double tax in the same way.

 

[motorbiking]

That's interesting. I had a friend whose family have an unlisted company worth just over a billion pounds. I've occasionally wondered how they kept it in the family, to pass to the next generation.

When you say unlisted, you mean publicly? Lots and lots of PE companies are worth Billions, but I don't know of any that are not limited.

In terms of how you pass the company to the next family member (or employee or whatever). You create share holder participation schemes and invite people to buy in to them subject to certain limitations and rules. You may choose to lend them the money to buy the shares which are discounted at say 10p in the £ or 1p in the £1. If the shares are sold you pay CGT on the gain, if you fall out of the scheme or need to be pushed out of the scheme there are various formulas or decelerators which define what you get. These are often called "good leaver" or "bad leaver"

 

[Lower]

Do they though?


It's those who squirrel money away (especially in tax-efficient ways) that pay less in tax, is it not?

Those who have sufficient money to squirrel money away in tax efficient ways have already paid more tax in absolute terms (not a percentage but in actual thousands of pounds) than those who don't in my experience.

 

[motorbiking]

Do they though?


It's those who squirrel money away (especially in tax-efficient ways) that pay less in tax, is it not?

Not when you take account of benefits received. About 20% of the population are net contributors and 80% net benefitors.

 

[motorbiking]

Those who have sufficient money to squirrel money away in tax efficient ways have already paid more tax in absolute terms (not a percentage but in actual thousands of pounds) than those who don't in my experience.

Typically percentages too.

 

[carmanmemoranda]

Not when you take account of benefits received. About 20% of the population are net contributors and 80% net benefitors.

And some pay, even though they cannot afford to live properly. We've been over this before.

Maybe wages are too low, relatively, not as a minimum wage figure.

 

[Lower]

When you say unlisted, you mean publicly? Lots and lots of PE companies are worth Billions, but I don't know of any that are not limited.

In terms of how you pass the company to the next family member (or employee or whatever). You create share holder participation schemes and invite people to buy in to them subject to certain limitations and rules. You may choose to lend them the money to buy the shares which are discounted at say 10p in the £ or 1p in the £1. If the shares are sold you pay CGT on the gain, if you fall out of the scheme or need to be pushed out of the scheme there are various formulas or decelerators which define what you get. These are often called "good leaver" or "bad leaver"

No inheritance tax is liable on shares in a private limited company or on shares in a company listed on the AIM.

You can leave those shares to whoever you want. However, the recipient of the shares would then pay tax on any income they receive as a result of owning those shares.

 

[motorbiking]

which is why you don't do it like that.