Talk:Inheritance tax in the United Kingdom/Archive 1

Archive 1

Untitled

As I edit I'll put my rationale in this box. I see that I am opening the discussion and that there have been very few edits. I am an Inheritance Tax specialist by trade so I hope the existing authors will forgive me if I'm quite bold with my edits. I'll also bring this page to the attention of a few people in my field in the hope either that they will become wikipedians, or at least that they might give me feedback outside wikipedia.

I haven't touched the historical details in the first paragraph, but I haven't verified them either. I will look this up if I get a chance.

I didn't feel that the existing statement of what is taxed and what can be deducted was very clear. I thought two consecutive lists was a useful way of approaching that. My lists are not definitive, and I'll compare with one of the textbooks shortly to see if I'm missing anything crucial.

As a solicitor myself I know that the "12 months of probate" paragraph is wrong - it can take 12 months or more but I'm pleased to say I often do it quicker. I removed it entirely on the grounds that I thought it was not 100% on topic, but please restore it if you like & I'll edit around it.

I followed the order of the existing article, but apart from that I completely rewrote the section on avoidance. I am wondering if "avoidance" should perhaps become "mitigation" in the current political climate. On the other hand, I'm concerned about NPOV. The article has to be a factual "some people do this" not an "I advise you to do this to avoid tax" (which is the line I take with my clients, of course).

Incidentally, I've added links where I'm sure there's no article (APR, BPR and so on) on the assumption that someday somebody - probably not me - will realise there is a gap and fill it.

AndyJones 02:14, 9 September 2005 (UTC)

Article is out of date

This article needs updating, in the light of the recent Budget (March 2006) in which the Chancellor of the Exchequer attacked trusts, possiby unintentionally. I know the dust hasn't settled yet, but people should be warned that the situation has changed. That's the reason I'm consulting this article, and I'm disappointed that it's not more up to date.

Good idea in principle. There's no point being disappointed with wikipedia, though: paper encyclopedias don't update this fast either. Those of us who are in the industry have enough work on without people complaining that we haven't got around to this Wikipedia article. Actually, the article as it stands does not cover the IHT treatment of trusts, so having just quickly read it through, I couldn't find a single sentence I wanted to change as a result of the budget, except that "some" perhaps now needs to become "most" in "some gifts of this kind, however, are disadvantageous...". A better plan might be a new page, linked from this one, called Taxation of trusts (United Kingdom) or similar. I'm not promising to find the time to do this in the next few days, though. AndyJones 08:04, 4 April 2006 (UTC)

Balance

The article is a little unbalanced in that it includes a criticism section but does not cite any arguments in favour of retaining inheritance tax. These articles [1] [2] by Johann Hari might be worth a look. Quotes: "In reality, only the richest 6 per cent pay inheritance tax", "A bare minimum for qualifying for life on the centre-left is a belief in taxing the unearned privilege of the rich. Why should somebody be handed a house or millions of pounds they have done nothing to earn?" 217.155.20.163 17:44, 29 December 2006 (UTC)

Coming from Australia, which totally abolished this disgusting and iniquitous tax over 25 years ago, I thought I would encourage the people burdened with it in the UK with a story of how it was dealt with back in the fifties, when it still applied in all its force in NSW.

Several hundred miles north-east of Sydney there was a large sheep station, that ran over 40,000 sheep in the early fifties, when the wool boom was on and each sheep carried a weeks wages on her back. The station was owned by a Catholic family that had lived in the area for four generations, who were the salt of the land, and treated their staff of 45 men so well that the staff knew they could never expect a better employer. The family had a history of not being long livers, so at age 50, the current owner went through the procedure of giving the property to his eldest son. This was necessary, as the level of death duties was such that the property would have to be sold if it had to be paid. However three years had to elapse after the gift was made for it to be effective.

On a hot January afternoon, the owner was sitting on a couch on his verandah when he had a massive fatal seizure, three days before the three years was up. The family knew what to do. There was a large freezer in the kitchen full of groceries. This was cleared out and he was popped in there for three days. Then he was put back on the couch, and the local Catholic Priest, who was in on the act, was summoned. He administered the Last Rites of the Church (which can only be administered to a living person), and then departed, with a donation cheque for £20,000 for the Church's school fund (remember this was 1951). Officially, he died shortly thereafter, and the property passed to his son without the payment of any duty.

The interesting thing to note was that over fifty people knew what was going on, and no-one blew the whistle. This demonstrated the community attitude to this tax.

Well I suppose I have upset the balance a bit more, so lets hear it from someone who thinks it is a good thing.

It always gives me a rueful chuckle when I hear people bleating on about inheritance tax (I'm not suggesting that you in particular are a "bleater", btw, just the general complaints). My understanding is that in the UK at least, inheritance tax is only payable on the value of an estate above 300,000 pounds. If a person leaves an estate worth 325,000 quid, then the tax to be paid will be £10,000- or roughly 3%! I can certainly say that if I paid 3% tax on my income, then I would be chuffed to frickin' bits and booking holidays to the Seychelles to celebrate. And, of course, the average house price in the UK (even with recent explosive increases in value) is about 210,000 - so the vast, vast majority pay no inheritance tax whatsoever. I can't help but think that many of those members of the public who rail against IT erroneously consider that it extracts 40% of the value of the entire estate- it most certainly does not. A parent with two kids who leaves an estate worth 354,000 (the average cost of a house in London, by a long, long way the richest region of the UK) will pay about 21 grand tax in total (less than 6%) and will leave his family 167,000 pounds each. <good faith sarcasm> IT is indeed a bitter pill to swallow....</good faith sarcasm> Badgerpatrol 14:29, 3 October 2007 (UTC)

Nonetheless the earned income that paid for the house was taxed, and stamp duty (a far more iniquitous tax - since it taxes the frequency of relocation as well as the value) was doubtless paid. And if the children live at home, yes 21 grand might not seem a lot compared to the capital value, but they may still have to sell, incurring further costs and stress at a doubtless already bad time. The reason income tax, NI and VAT, although far more onerous in general, escape the bad press, is that they are "pay as you go" schemes, they do not call for a relatively immediate payment of a lump sum. 172.200.80.239 (talk) —Preceding comment was added at 10:33, 30 November 2007 (UTC)

Or, a cynic might argue that the reason that IHT receives a bad press is because newspaper owners and editors, their families and associates are among the wealthy super-elite (the richest 6% of estates) who actually have to pay it. A tax taking a (usually) very small proportion of totally unearned wealth from some of the richest members of society cannot possibly be unfair in principle. Badgerpatrol (talk) 16:29, 18 March 2008 (UTC)

With regards to "balance" I feel that the very wealthy are particularly concerned with IHT avoidance. I wonder how many offshore trusts and other instruments of blatant avoidance have been setup by certain Forumla1 superemos? Indeed, even Queen Elizabeth II has successfully avoided paying inheritance tax on her mother's estate (worth £50m) simply by lobbying her government.

The reason why I bleat about tax: I quote "Born free, taxed 'til death"! No, correction, taxed even AFTER death! Imagine if the taxman gate-crashed the funeral of your loved one, jangling the keys in his pocket, whilst softly whistling a happy tune just to get your attention. I'd suggest you tell him where to go, right? Rather than "only" paying IHT on £25k of my £325k estate, I'd rather pay an additional 0.002% of income tax (ok, I'm just guessing but some tax geek could do the math) so we gain a more streamlined tax system with less rules and layers of stupid bureucracy.

Sorry if any of you guys earn a living off IHT and related industries such as trust lawyers etc. The bankers are under the spotlight. Next will be the insurers. IHT cant last for much longer but most likely after my lifetime. — Preceding unsigned comment added by 62.6.164.67 (talk) 10:45, 3 October 2012 (UTC)

Budget

Ive added data from the recent budget report on inheritance tax, but I am not sure how to reference. This is my source: [3] —Preceding unsigned comment added by Chickenfeed9 (talk • contribs)

• Good one. I've tidied the sourcing a bit, here. That's not a brilliant source, but for the day of the budget I think it's perfect. Also, it's good not to use words like "current" because Wikipedia pages can easily get out-of-date. AndyJones 17:30, 21 March 2007 (UTC)

Is it an allowance or is it a nil rate band?

One of the three edits that I made after the 2007 Pre-Budget Report was to change "nil rate band" to "inheritance tax allowance", which I believe is the current Treasury preferred phraseology in line with their simplification project.

Andy Jones has changed it back to the more traditional nil rate band terminology.

My sources were sections 5.76 to 5.78 of Command Paper 7227, the 2007 Pre-Budget Report and Comprehensive Spending Review (http://www.hm-treasury.gov.uk/media/7/4/pbr_csr07_completereport_1546.pdf) and the Chancellor's actual speech (http://www.hm-treasury.gov.uk/pbr_csr/pbr_csr07_speech.cfm) which both refer to allowance rather than nil rate band

But Andy Jones cites the HMRC's FAQs produced after the Pre-Budget which again use the phrase nil rate band.(His comment on the history page)

I'm happy to defer to Andy until such time as HM Treasury and HMRC are consistently using one language. I suspect we will all end up calling them allowances - as happened with pensions simplification - but let's wait and see, I agree I was a little hasty with my change. Twojags 13:43, 9 November 2007 (UTC)

It seems pretty clear that the "nil-rate band" terminology is going to stay. See http://www.hmrc.gov.uk/pbr2007/it-nil-rate-band.pdf which is the draft legislation itself. It uses the term repeatedly. AndyJones 16:58, 9 November 2007 (UTC)

Tax on receipt of inheritance

What is the situation on inheriting money. Does this count as income for the recipient and do they have to pay tax on it? —Preceding unsigned comment added by Libraryboy70 (talk • contribs) 14:04, 29 August 2008 (UTC)

• Depends. Recipients of legacies ("I give £500 to Joe Bloggs") receive capital: that is, it's not income in their hands, doesn't need to be declared, and doesn't suffer income tax. Recipents of the residue of an estate ("I give the rest of my estate to Joe Blogs"), or of a share in it, receive the estate's income, and that is taxed. Ideally, the executors will provide a tax certificate to the beneficiaries so they will know how much to declare. But that's the very simple answer. See Wikipedia's legal disclaimer, too. AndyJones (talk) 19:24, 31 August 2008 (UTC)

infographic?

Hi, I’m Andrew Clark and I work at the Office for National Statistics in the UK.

We publish lots of infographics and I wonder if these ones would be of interest for Inheritance_Tax_(United_Kingdom)

https://commons.wikimedia.org/wiki/File:Inheritance_by_amount_and_distribution_received_and_action_taken_with_inheritances_in_Great_Britain_between_2008_and_2010.png

FYI, the full gallery, updated weekly, is here <https://commons.wikimedia.org/wiki/Category:Content_created_by_the_Office_for_National_Statistics>

All the best

Andrew Clark (smanders1982) 10 Dec 2013

Smanders1982 (talk) 13:54, 10 December 2013 (UTC)

Problem with the Controversy section

This section should refrain from repeating 'tear-jerker' stuff worthy of the red top press, such as: 'Inheritance Tax is an emotive tax which seems to be widely disliked by the general public as it comes at the time of loss and mourning'. Are we supposed to sob in sympathy or what?

There are also arguments in favour of estate duty/inheritance tax. In particular, the heirs have in many cases done nothing to earn or deserve their inherited money. The controversy section should give a plain, matter-of-fact summary of the arguments for and against. Norvo (talk) 00:13, 23 September 2014 (UTC)

Rewrite of portions is greatly needed for clarity

Under the heading "Controversy", it reads "This critique followed the death of Gerald Grosvenor, 6th Duke of Westminster, whose significant at-death loose 'interests', the benefit of which his children by trustees' discretion perhaps receive demonstrate suspected tax savings. The unpublished size of the late Duke's death estate compares with the valuation of the family-related landholdings of c. £9,000,000,000. Critics claim inheritance tax impacts more on the living standards of the middle class and less on plutocrats and the super rich. If the family assets were taxed as if one taxable estate the taxation would equate to the inheritance taxes paid nationally for 2014-2015." This is nearly opaque to the average reader and, I suspect, suffers from many lapses of correct grammar. What, for example, is the phrase "...the benefit of which his children by trustees' discretion perhaps receive demonstrate suspected tax savings" trying to say? "...His children by trustees' discretion perhaps receive" has to be one of the most awkward phrases I've ever read. Likewise, the phrase "...the taxation would equate to the inheritance taxes paid nationally for 2014-2015" seems nonsensical. What is "the taxation" referred to -- the amount of taxes paid? -the taxation rate? -something else? And "equate to"? Did the editor mean "be equal to"? And "paid nationally for 2014-2015" by whom? -the Grosvenor family? -the entirety of the UK? It's impossible for me to tell. Bricology (talk) 22:51, 27 November 2017 (UTC)