Non spiky Politics 2

Whitewavemark2

Two things - can anyone give me a rational explanation as to why someone working and earning pays tax, but someone gifted a whole load of money having not got out of bed for it, doesn’t pay a brass farthing?

Also I don’t understand the rationale, that, given the premise that growth is badly needed and knowing that those with wealth do not spend, but squirrel it away. And yet to pay for the tax cut, the Tories propose to cut welfare - people who do spend any extra income on life’s necessities, like fuel, food, children’s clothing etc thus helping to grow the economy?

There is a need to distinguish between the so called mega rich and the moderately wealthy.

Which is why I advocate for an increase of the IHT threshold and the rate to be in stages not an immediate 40%.

The moderately wealthy (you could call them middle class) do spend their money, often locally, they employ gardeners, cleaners, go out to eat, theatre etc.

The effect on the economy is fairly small however, and it will not make up the shortfall that cutting welfare will have on growth.

So how is it fair to give say a billion to those who are already relatively wealthy as against retaining that billion to support say health, education, benefits etc.

In my view it is not an economic growth strategy, but a redistribution of wealth from the poor to the rich.

Who gives away a billion?
Any monies gifted to family over a fairly low amount will be taxed, so that brings in money.
There are few mega rich people in the UK in comparison to the well off as GrannyGravy says.And they all pay tax and they all buy goods and services and are usually employers.

"In the 2023 to 2024 tax year, 30,400 estates paid Inheritance Tax (IHT) in the UK, which accounts for 4.72% of all UK deaths." AI generated

The problem that I have with increasing the IHT threshold is that further creates an imbalance between those who come from home owning families and those who come from families that haven't been able to get on the housing ladder, it also helps to fuel the housing market whilst effectively reducing the amount of money that people have to spend on things that would further boost the economy. I can see that people want to pass on their wealth to their children but I can also see how damaging that potentially is in creating a divisive society. It's difficult, if not impossible to create a fairer society that pleases everyone.

foxie48

"In the 2023 to 2024 tax year, 30,400 estates paid Inheritance Tax (IHT) in the UK, which accounts for 4.72% of all UK deaths." AI generated

The problem that I have with increasing the IHT threshold is that further creates an imbalance between those who come from home owning families and those who come from families that haven't been able to get on the housing ladder, it also helps to fuel the housing market whilst effectively reducing the amount of money that people have to spend on things that would further boost the economy. I can see that people want to pass on their wealth to their children but I can also see how damaging that potentially is in creating a divisive society. It's difficult, if not impossible to create a fairer society that pleases everyone.

Your last sentence is so true, it is literally impossible.

History shows that it has been tried.

The problem that I have with increasing the IHT threshold is that further creates an imbalance between those who come from home owning families and those who come from families that haven't been able to get on the housing ladder

Looking at it from another angle, it could help some younger people who have been unable to purchase a home of their own, as they could inherit enough for a good deposit.

The Conservatives propose exempting family homes from inheritance tax and increasing the tax-free allowance to £500,000 per person. They say this would cost £6bn a year. Our analysis suggests £7.7bn–£10.9bn, once we account for the incentive to hold on to homes and move other wealth into housing.

The problem is that the proposal gives wealthy pensioners a powerful reason to buy bigger houses. If you sell investments, and put the money into your home, then your children could save 40p in tax for every £1 you spend. If you downsize, on the other hand, every £1 of house value you sell could increase IHT by 40p.

(Source Dan Neidle Tax Policy Associates)

More here about why this is wrong and unfair.

taxpolicy.org.uk/2026/10/08/conservatives-inheritance-tax-family-home-cost/

That's interesting, Graphite I think it would also increase house prices for those lower down the housing chain, not helpful to younger people wanting to buy their first home even with the help of the "bank of mum and dad".

can anyone give me a rational explanation as to why someone working and earning pays tax, but someone gifted a whole load of money having not got out of bed for it, doesn’t pay a brass farthing?

Could it be that it’s because those savings etc had/have already paid tax on them when originally earned? Yes I get your point that any inherited money (I’ve never had any so just an observation here) just drops into the laps of some lucky people but I dare say back in the day when it belonged to the person who earned it, all relevant deductions were made at that time?

If gifted a whole load of money then Inheritance Tax would have been paid on it.
Moneys earned by the generous benefactor would also have been taxed.

foxie. I do think it would discourage people who might otherwise downsize. Neidle estimates the raw number would be comparstively small but it would happen disproportionally nationally adding to the shortage of family-sized homes in London and the South East.

I don’t think a great deal of thought has gone into this promise other than a vain hope it will appeal to what’s left of the dwindling Tory voter base and maybe encourage some who have defected to Reform to come back.

No doubt an idea from Andrew Griffith, the man who was junior Treasury minister under Liz Truss who admitted that its "fatal mistake" then was failing to clearly set out how tax cuts would be paid for. A sense of déjà vu?

Although we can guess how Tories would pay for this little sweetener of giving a tax cut where 90% of it would go to the wealthiest fifth of pensioner households. The poor would pay for it with more austerity.

Neidle sums it up: The Conservatives’ press release says inheritance tax is “bad for growth”. The evidence doesn’t support that.

The politics of envy.

I don't think it's the politics of envy to point out the ramifications that a policy might have on different groups of people. I think politicians are doing that all the time ie How will this affect our core voters? Who will this policy potentially alienate? Will this policy policy appeal to voters who might not like our other policies? etc etc. Political parties spend a lot of time and money on focus groups. Why? Because they want to know how different groups, ages etc will respond to their policies and how, potentially, that might affect who votes for them.

I have to say IHT has always puzzles me just a bit.

It does seem, on the surface, very churlish to (re) tax money, which has already probably been taxed at least twice already.

Then again, I think I’d be happier if the limits were raised, rather than abolished entirely.

eazybee

The politics of envy.

That’s such a nasty expression, particularly when none of us have zero idea about any of our own financial and personal circumstances.

Or even other peoples haha

It does seem, on the surface, very churlish to (re) tax money, which has already probably been taxed at least twice already.

If you were to follow the progress of, say, £100, through the economy you would find that, unless it were squirreled away somewhere and never saw the light of day, it would be taxed loads of times until it was eventually extinguished. Which is as it should be because the purpose of tax is to extinguish money the state has put into the economy.

And, if people want to leave their heirs something to get them onto the housing ladder, why don't they do it when they are still alive?

I still don't understand why, when IHT allowances 'can' amount to £1million and the heirs also keep 3 fifths of whatever is in excess of £1 million, it is such a hardship.

neither do I, and neither does my sister, who has a great deal, by virtue of her DH's family money

and will pay every penny of I asked of her

Because she believes that other people need it more.

Simple.

Politics of envy?

Bollueax. Its about those who have more than enough giving to those who have very little but also Human beings needing homes, food, childcare (our future) and maybe a bit for pleasures like days out?

They were both NHS hospital doctors, and saw it all.

MaizieD

^It does seem, on the surface, very churlish to (re) tax money, which has already probably been taxed at least twice already.^

If you were to follow the progress of, say, £100, through the economy you would find that, unless it were squirreled away somewhere and never saw the light of day, it would be taxed loads of times until it was eventually extinguished. Which is as it should be because the purpose of tax is to extinguish money the state has put into the economy.

And, if people want to leave their heirs something to get them onto the housing ladder, why don't they do it when they are still alive?

I still don't understand why, when IHT allowances 'can' amount to £1million and the heirs also keep 3 fifths of whatever is in excess of £1 million, it is such a hardship.

Put that way, it seems reasonable.

Since Russia is stepping up the attacks on Ukraine I hope all countries in Europe plus the US are increasing the arms to Ukraine in order to show Putin he cannot win this war.

I wonder just how much support Putin gets from other countries like China, North Korea etc. Unfortunately not many have defeated Russia going back through history. I can’t actually think of when they have been defeated but someone here will probably know.

Yes, Russia has been defeated on several occasions in the last few hundred years.

More recently, The Crimean War, Russo-Japanese War, WW1 and they withdrew after both the Afghan and first Chechen Wars.

World War 1 was interesting because of the rise of Communism and the Red Army v White Russians. I think they withdrew after a treaty. Unusual situation and it must have been very difficult to live in those times. Treaty of Brest Litovsk, I actually remember that from history.

MaizieD

^It does seem, on the surface, very churlish to (re) tax money, which has already probably been taxed at least twice already.^

If you were to follow the progress of, say, £100, through the economy you would find that, unless it were squirreled away somewhere and never saw the light of day, it would be taxed loads of times until it was eventually extinguished. Which is as it should be because the purpose of tax is to extinguish money the state has put into the economy.

And, if people want to leave their heirs something to get them onto the housing ladder, why don't they do it when they are still alive?

I still don't understand why, when IHT allowances 'can' amount to £1million and the heirs also keep 3 fifths of whatever is in excess of £1 million, it is such a hardship.

I thought only a small amount could be gifted annually?

I would imagine that assets are tied up in property, premium bonds, isa etc, so not easy to give whilst still alive, and may be needed as we cannot look into the future to know how much we may need ourselves.

Just a few thoughts.