I have to own up to having to look at exactly how it works last time I commented on it. The politics Vloggers I watch have stated that people can earn up to £1m, and that it only affects 5% of the population. The truth is that you can earn £500k without paying tax for being a direct beneficiary (sibling, offspring or parent), £1m can be earned if you are married and use your partners allowance or £325 for anyone else. It is not 5%; it is actually 4% of the whole population. It would be interesting to see a devolved breakdown on that as I would assume a majority of this affects England more than the other nations.
I would assume a majority of this affects England London more than the other regions.
Fixed that for you. The difference between London and everywhere else is so vast that the people in, say, the north of England would benefit from abolishing inheritance tax no more than people in Scotland or Wales. I’d be interested to know how many people in the south west are affected though, since we have the second highest house prices after London, and a higher percentage of second homes house-hoarding amongst the wealthy compared to the rest of the country. So I’d love to see a devolved breakdown not just by nation, but by region or county.
It be an additional viewpoint I would like to see also.
I am from the NE. I could easily see many in my area falling foul of the inheritance tax limits. I see London as being an area where many circumvent it by offshoring.
Are the limits determined by the whole value of the estate, or the value passed to each descendent? If the former, I can see how even a semi-decent house could pass the £375k threshold. But if the latter, once the estate has been split between multiple children and/or grandchildren, very few recipients are going to be hitting £375k from half a house.
Yeah, I concur that it’s on the value of the estate of the person who died.
But there is also this: “The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.”
And given the threshold rises to £500k when it’s between direct family (parent to child, etc), and you’re only paying on the value above the threshold… you have to inherit a pretty big house from your parents to even have to pay inheritance tax. Say it was a £550k house, so there’s tax to pay on the £50k over half a million. 40% of that comes out to £20k, which sure, is a lot of money… but getting a little £20k mortgage on that massive £550k house you just inherited would absolutely be viable. I think the overlap of people with family wealthy enough to have £500k+ houses, but who themselves are so low paid and have such a low credit score that a tiny mortgage is literally impossible, is really, really low. Like there could be a few edge cases, but I’d be willing to bet the majority of people who are in a position to inherit a £550k house are also in a position where a £20k mortgage would not be hard to arrange, especially given they now have a high value asset to secure the mortgage against.
Exactly. You’d have to be really, really untrustworthy, with an appalling credit score and no income, and probably a criminal record for fraud, before a bank wouldn’t do that mortgage. So paying inheritance tax on a high value asset isn’t impossible if you don’t have the actual cash in the bank at the time of your relative’s death.
It’s an entirely intentional deception. People get the fear that they’ll not be able to pass on their 3-bed semi-detached*, a dinner table set and the last dregs of a private pension to their kids, so they vote so that rich people don’t have to redistribute wealth.
I have to own up to having to look at exactly how it works last time I commented on it. The politics Vloggers I watch have stated that people can earn up to £1m, and that it only affects 5% of the population. The truth is that you can earn £500k without paying tax for being a direct beneficiary (sibling, offspring or parent), £1m can be earned if you are married and use your partners allowance or £325 for anyone else. It is not 5%; it is actually 4% of the whole population. It would be interesting to see a devolved breakdown on that as I would assume a majority of this affects England more than the other nations.
Fixed that for you. The difference between London and everywhere else is so vast that the people in, say, the north of England would benefit from abolishing inheritance tax no more than people in Scotland or Wales. I’d be interested to know how many people in the south west are affected though, since we have the second highest house prices after London, and a higher percentage of
second homeshouse-hoarding amongst the wealthy compared to the rest of the country. So I’d love to see a devolved breakdown not just by nation, but by region or county.It be an additional viewpoint I would like to see also.
I am from the NE. I could easily see many in my area falling foul of the inheritance tax limits. I see London as being an area where many circumvent it by offshoring.
Are the limits determined by the whole value of the estate, or the value passed to each descendent? If the former, I can see how even a semi-decent house could pass the £375k threshold. But if the latter, once the estate has been split between multiple children and/or grandchildren, very few recipients are going to be hitting £375k from half a house.
It looks to me like it is the estate of the person who died.
I think this is because tax is paid before it is passed on to the beneficiary.
I am not a legal expert.
Yeah, I concur that it’s on the value of the estate of the person who died.
But there is also this: “The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.”
And given the threshold rises to £500k when it’s between direct family (parent to child, etc), and you’re only paying on the value above the threshold… you have to inherit a pretty big house from your parents to even have to pay inheritance tax. Say it was a £550k house, so there’s tax to pay on the £50k over half a million. 40% of that comes out to £20k, which sure, is a lot of money… but getting a little £20k mortgage on that massive £550k house you just inherited would absolutely be viable. I think the overlap of people with family wealthy enough to have £500k+ houses, but who themselves are so low paid and have such a low credit score that a tiny mortgage is literally impossible, is really, really low. Like there could be a few edge cases, but I’d be willing to bet the majority of people who are in a position to inherit a £550k house are also in a position where a £20k mortgage would not be hard to arrange, especially given they now have a high value asset to secure the mortgage against.
There won’t be many banks who would not mortgage a £550 asset for £20k.
Exactly. You’d have to be really, really untrustworthy, with an appalling credit score and no income, and probably a criminal record for fraud, before a bank wouldn’t do that mortgage. So paying inheritance tax on a high value asset isn’t impossible if you don’t have the actual cash in the bank at the time of your relative’s death.
It’s an entirely intentional deception. People get the fear that they’ll not be able to pass on their 3-bed semi-detached*, a dinner table set and the last dregs of a private pension to their kids, so they vote so that rich people don’t have to redistribute wealth.