Knife in the back for pensioners..

Sporky

mart said:

Do "ordinary people" typically leave an estate worth a third of a million? Or two thirds of a million if they're married? I suspect a lot of people would class that as mega-wealthy.

"Mega-wealthy" to have paid off the mortgage? Average house price is what, about a quarter of a million, so I'd say you're a factor of at least a hundred, probably nearer a thousand out.

Legionreturns

Sporky said:

I do find it quaint that there are people who still think success should be punished with as much tax as possible.

Success isn't inherited...

quarky

guitarfishbay said:

Fair enough.  Yes to me the year exemption rule leaves who pays the tax down to the health lottery.  That is completely unfair at it's base level. 

Exactly. So get rid of the loopholes then that enable the health lottery. Just tax income as income, simple.

Legionreturns said:

Sporky said:

I do find it quaint that there are people who still think success should be punished with as much tax as possible.

Success isn't inherited...

Yep, success isn't being punished. If my parents made millions and left me £800k, I would just be paying standard income tax on it, but that is OK, it was their success, not mine.

ToneControl

Fretwired said:

fretmeister said:

If you gift a house and death occurs more than 7 years after the completion of the conveyance then it is not subject to Inheritance Tax.

https://www.gov.uk/inheritance-tax/gifts

OK thanks. Didn't know that.

the limit is per year for the last 7 years you live
you can give away millions 10 years before you croak
However, you can't continue to live in a house you've given to your kids, that doesn't count as "giving"

ToneControl

Fretwired said:

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

National insurance doesn't cover the cost .. nowhere near. The sooner governments come clean the better.

yes, but that's not the only tax they've paid

however, it is true that the plan to get one generation to pay for the retirement and care of the previous generation was based on a set of assumptions that is no longer valid 

Expecting immigrants to pay for it (as some people do) is stupid though, it becomes a pyramid where we need to keep expanding the population

We probably need to send all the pensioners somewhere sunny that has cheap wages
Marigold hotel I suppose

Axe_meister

I'd hope that when I die and my kids get the house they sell it and pay off their own mortgages/student loans.
My generation was able to buy there first house at 2/3 times income. Had free university education. My kids won't they will be lucky to buy any house. They won't have an asset to pay for their old age care if they need it. Stick the house in a trust and get some life insurance that will pay for any tax due on the property/assets.

ToneControl

sw67 said:

A workmate of mine has just been through this - assets stripped from over 200k to 14k over 5 years in a council run home. He questioned the cost of care many times and was even told that his father was subsidising the residents without assets. The family home should be exempt and i don't mind paying more tax to fund it.

homes taking private and paying residents charge the paying residents about 50% extra to subsidise the rate the council pay for council-paid residents

Lovely, isn't it?

ToneControl

Fretwired said:

fretmeister said:

Fretwired said:

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

National insurance doesn't cover the cost .. nowhere near. The sooner governments come clean the better.

I know that.

That's also why I'd be happy if it was increased. Voluntary systems have the age old problem that many won't bother and then end up in poverty.

Take out an insurance policy .. there are loads about and if you start young they don't cost much. I'll check but I recall that to fund healthcare, pensions and welfare would take an eye watering rise in NI. Even Labour baulked at the idea and headed down the death tax route.

Insurance:
Edit: forget that - you need assets.

looks like you can get an annuity paid tax-free to the care home
probably a good idea for those with a more expensive property - sell up, buy the annuity and gift the cash

mart

Sporky said:

mart said:

Do "ordinary people" typically leave an estate worth a third of a million? Or two thirds of a million if they're married? I suspect a lot of people would class that as mega-wealthy.

"Mega-wealthy" to have paid off the mortgage? Average house price is what, about a quarter of a million, so I'd say you're a factor of at least a hundred, probably nearer a thousand out.

I can't help wondering if Location=Surrey vs Location=Swansea has anything to do with our different perspectives on this.

Garthy

quarky said:

guitarfishbay said:

Fair enough.  Yes to me the year exemption rule leaves who pays the tax down to the health lottery.  That is completely unfair at it's base level. 

Exactly. So get rid of the loopholes then that enable the health lottery. Just tax income as income, simple.

Legionreturns said:

Sporky said:

I do find it quaint that there are people who still think success should be punished with as much tax as possible.

Success isn't inherited...

Yep, success isn't being punished. If my parents made millions and left me £800k, I would just be paying standard income tax on it, but that is OK, it was their success, not mine.

If it wasn't being punished there wouldn't be a threshold. 

Snap

The problem is, no party has had a proper plan for social care. It should be, IMO, part of the health service, and should be included. However, its an escalating large cost that will only increase as life expectancy increases.

How you fund this must be a night mare challenge for any government, but it needs addressing.

I think it is absolutely disgusting that we can have our oldest, most vlunerable citizens facing a lack of adequate compassionate dignified care in their final years. Its shameful.

Whether the tory's plan is the right one, I don't know, but trying to address this without resorting to taxation is tricky.

I'd look at diverting 1% of that corporation tax into it - don't cut to 17%, cut it to 18%, but put the exta 1% in social care. For starters

grungebob

Ive been reading this thread with some interest as my mum is in the process of selling her house to move in with one of her kids, shes gifting them the money so a house can be bought with an annex so she can be taken care of later on down the road. Thankfully she's currently in fine health and very active for a 70 yr old. So do we think this is wrong? should my sister have to pay IHT or income tax because she maybe be perceived as derived an income or benefiting from this gift?

With IHT in general Im a little on the fence about it,  on one hand I understand peoples opinion on undeserved/unearned income but on the other hand  I can see the argument for the parent (lets say for this example) having paid Tax on the earnings, stamp duty etc on the house, VAT to the agent to sell, interest tax on the money they saved etc then giving or leaving this money behind for their kids/grandkids and not being taxed again on everything thats already had tax taken from it? surely that's being taxed twice?

To me its akin to me paying income tax on my earnings, having to use some of my earnings to cover some business expenses then being paid these expenses back in my salary to be taxed again on the money as HMRC think its an income again?

Legionreturns

Snap said:

The problem is, no party has had a proper plan for social care. 

Hmm... I watched the debate on itv last night. UKIP had a plan. It was something something immigrants.

Oh wait. That night have been their plan for the NHS. 

Or Tax.

Or obesity.

Hard to recall!

quarky

Garthy said:

quarky said:

guitarfishbay said:

Fair enough.  Yes to me the year exemption rule leaves who pays the tax down to the health lottery.  That is completely unfair at it's base level. 

Exactly. So get rid of the loopholes then that enable the health lottery. Just tax income as income, simple.

Legionreturns said:

Sporky said:

I do find it quaint that there are people who still think success should be punished with as much tax as possible.

Success isn't inherited...

Yep, success isn't being punished. If my parents made millions and left me £800k, I would just be paying standard income tax on it, but that is OK, it was their success, not mine.

If it wasn't being punished there wouldn't be a threshold. 

Not sure how you draw that conclusion. Income from inheritance has a threshold to allow you to NOT pay tax on a pretty massive chunk of income. Someone could receive £650k and pay absolutely zero tax on it. Nada. Zilch. Nothing. If that is punishment, sign me up for the full masochistic version thanks.

grungebob said:

Ive been reading this thread with some interest as my mum is in the process of selling her house to move in with one of her kids, shes gifting them the money so a house can be bought with an annex so she can be taken care of later on down the road. Thankfully she's currently in fine health and very active for a 70 yr old. So do we think this is wrong? should my sister have to pay IHT or income tax because she maybe be perceived as derived an income or benefiting from this gift?

With IHT in general Im a little on the fence about it,  on one hand I understand peoples opinion on undeserved/unearned income but on the other hand  I can see the argument for the parent (lets say for this example) having paid Tax on the earnings, stamp duty etc on the house, VAT to the agent to sell, interest tax on the money they saved etc then giving or leaving this money behind for their kids/grandkids and not being taxed again on everything thats already had tax taken from it? surely that's being taxed twice?

To me its akin to me paying income tax on my earnings, having to use some of my earnings to cover some business expenses then being paid these expenses back in my salary to be taxed again on the money as HMRC think its an income again?

In my opinion, yes, glad to know you Mum is in good health, but your sister should have to pay tax on it. She pays tax on all of the rest of her income right, so why should this be different? If I form a company, it pays corporation tax, NI, etc. and the money the company has earned is generally after-tax for the customers. So any income I draw down from that has already been taxed too.. 

Rocker

hywelg saidlp

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

In a nutshell, that is the way it is. Otherwise why pay National Insurance!

crunchman

mart said:

Sporky said:

mart said:

Do "ordinary people" typically leave an estate worth a third of a million? Or two thirds of a million if they're married? I suspect a lot of people would class that as mega-wealthy.

"Mega-wealthy" to have paid off the mortgage? Average house price is what, about a quarter of a million, so I'd say you're a factor of at least a hundred, probably nearer a thousand out.

I can't help wondering if Location=Surrey vs Location=Swansea has anything to do with our different perspectives on this.

  According to @mart anyone who owns a family house in Greater London or the home counties is not an ordinary person.  My wife's Grandparents are in a house that is worth over a million at current prices, and her Grandfather spend all his life working at Gillette making razors, and her Grandmother worked at WH Smith.

Fretwired

Rocker said:

hywelg saidlp

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

In a nutshell, that is the way it is. Otherwise why pay National Insurance!

No it isn't ... the tax raised in a single year doesn't even cover the government's expenditure. People have a view there's a fund. The NHS needs billions the care system needs billions .. the cash has to come from somewhere so be prepared for tax increases.

And if you bought a house in the 1960s for say £15K and it's now worth £1.5 million don't you think you should use some of the value you'll get from the house sale to fund your care?

grungebob

quarky said:

grungebob said:

Ive been reading this thread with some interest as my mum is in the process of selling her house to move in with one of her kids, shes gifting them the money so a house can be bought with an annex so she can be taken care of later on down the road. Thankfully she's currently in fine health and very active for a 70 yr old. So do we think this is wrong? should my sister have to pay IHT or income tax because she maybe be perceived as derived an income or benefiting from this gift?

With IHT in general Im a little on the fence about it,  on one hand I understand peoples opinion on undeserved/unearned income but on the other hand  I can see the argument for the parent (lets say for this example) having paid Tax on the earnings, stamp duty etc on the house, VAT to the agent to sell, interest tax on the money they saved etc then giving or leaving this money behind for their kids/grandkids and not being taxed again on everything thats already had tax taken from it? surely that's being taxed twice?

To me its akin to me paying income tax on my earnings, having to use some of my earnings to cover some business expenses then being paid these expenses back in my salary to be taxed again on the money as HMRC think its an income again?

In my opinion, yes, glad to know you Mum is in good health, but your sister should have to pay tax on it. She pays tax on all of the rest of her income right, so why should this be different? If I form a company, it pays corporation tax, NI, etc. and the money the company has earned is generally after-tax for the customers. So any income I draw down from that has already been taxed too.. 

Thanks,

I understand your viewpoint I just dont agree with it.  It doesnt become an income to my sister I guess until it comes to sell the property, but it has reduced the care costs ( private or public) needed for my mum so surely that would need to be offset against any potential tax, at which point the system is convoluted that i'td cost more to police than received?

Pretty much everything we do is taxed at one point or another I just dont see a valid argument why it must be taxed again because the remainder of any estate is transfered, surely what ever the proceeds from that will be taxed again on anything its spent on or any interest it earns?

quarky

grungebob said:

quarky said:

In my opinion, yes, glad to know you Mum is in good health, but your sister should have to pay tax on it. She pays tax on all of the rest of her income right, so why should this be different? If I form a company, it pays corporation tax, NI, etc. and the money the company has earned is generally after-tax for the customers. So any income I draw down from that has already been taxed too.. 

Thanks,

I understand your viewpoint I just dont agree with it.  It doesnt become an income to my sister I guess until it comes to sell the property, but it has reduced the care costs ( private or public) needed for my mum so surely that would need to be offset against any potential tax, at which point the system is convoluted that i'td cost more to police than received?

Pretty much everything we do is taxed at one point or another I just dont see a valid argument why it must be taxed again because the remainder of any estate is transfered, surely what ever the proceeds from that will be taxed again on anything its spent on or any interest it earns?

IMO, if someone is given a house, that is a hell of a plus on the balance sheet so there should be tax to pay. I think we all agree when someone gets a £10m inheritance don't we, so the only real issue is about a "fair" limit? The other option if your sister was already living in that property with your Mum for a long time, (in my speculative but utterly uneducated suggestion) would be to put it in some kind of trust, and your sister pays income tax on the market rate rent while she is there. Either way, there should be tax to pay (again, just my opinion!). You talk about paying tax eventually, but if you apply that argument to wages, it doesn't work there either.

grungebob

perhaps im not relaying my point eloquently enough?

Im not saying paying tax eventually Im saying taxation has already occurred and will continue to as the money is spent or invested.  Your taxed at point of wages, your taxed at point of spending wages and your taxed again at point of investing any of said wages left, money that has already been taxed shouldnt in my opinion be liable to be taxed again simply because one person chose to give it to another?

In my example above the money from parent will be given to child, child will use this money and the majority of thiers to purchase a house for both.