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PeanutButter

Inheritance tax loopholes allowing super-rich to pay lower rates

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The UK’s super-rich pay half the rate of inheritance tax paid by the merely very rich, according to an analysis of HMRC data that throws fresh focus on how billionaires’ advisers use a “kitbag” of tricks to reduce heirs’ tax bills.

Estates worth £10m or more paid an average of 10% tax to the exchequer in the 2015-16 tax year compared with an average 20% tax paid by estates worth £2m-£3m, according to data released by HMRC following a freedom of information request by asset manager Canada Life.

The law states that estates should pay 40% tax on assets above £325,000 – or above £450,000 if the family home is given to children or grandchildren. But Neil Jones, the market development manager at Canada Life, said the richest of the rich often did not pay anywhere near that rate because they had access to “a myriad of potential solutions in an adviser’s kitbag to help mitigate IHT [inheritance tax]”.

“This difference in the net tax rates paid by estate isn’t always down to the value of the estate or the different type of assets held in an estate,” Jones said. “It’s often about a willingness to plan.”

The heirs of the late sixth Duke of Westminster paid no inheritance tax on the bulk of his £8.3bn family fortune following his death in 2016. Probate records show that Gerald Cavendish Grosvenor, who died aged 64 in August 2016, left a personal estate of £616,418,184 after payment of debts and liabilities.

 

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https://www.theguardian.com/business/2019/apr/03/inheritance-tax-loopholes-allowing-super-rich-to-pay-lower-rates

Edited by PeanutButter

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40 minutes ago, Locke said:

The only fair thing to do is abolish the tax entirely.

agreed

target the living rich not the dead ones 

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1 hour ago, longgone said:

agreed

target the living rich not the dead ones 

Aren't the people who inherit vast fortunes technically the living rich?

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3 minutes ago, PeanutButter said:

Aren't the people who inherit vast fortunes technically the living rich?

some are some are not. point being tax them on investments and profit i do not believe in death taxes of any kind. most people have already paid tax in the first place. 

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2 hours ago, longgone said:

some are some are not. point being tax them on investments and profit i do not believe in death taxes of any kind. most people have already paid tax in the first place. 

Inherited wealth is becoming a bigger and bigger factor in deciding who is and who isn't rich - is that really what we want?

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Always quick to point the finger at the lazy non worker.......what about the lazy non worker living off of a trust fund?......nobody got rich from working 40 hours a week for £25k pa.;)

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1 hour ago, tomandlu said:

Inherited wealth is becoming a bigger and bigger factor in deciding who is and who isn't rich - is that really what we want?

well at least it would give the current generation a reason to better themselves and their offspring. 

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6 minutes ago, longgone said:

well at least it would give the current generation a reason to better themselves and their offspring. 

You're havin' a laugh!........how rich you become boils down to......When you were born, Where you were born and Who you were born to.......who you know, who knows you.;)

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2 minutes ago, winkie said:

You're havin' a laugh!........how rich you become boils down to......When you were born, Where you were born and Who you were born to.......who you know, who knows you.;)

in some cases. in other cases it`s down to luck and hard work.  plenty people have worked hard and paid taxes why should taxes be paid twice on death. 

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17 minutes ago, longgone said:

in some cases. in other cases it`s down to luck and hard work.  plenty people have worked hard and paid taxes why should taxes be paid twice on death. 

Shouldn't if the richest are paying the least......20% for them 40% for the rest...... hardly fair or proper, it is things like this that get people's backs up.......special rates for special people, because they can, because they can afford it.;)

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55 minutes ago, winkie said:

Shouldn't if the richest are paying the least......20% for them 40% for the rest...... hardly fair or proper, it is things like this that get people's backs up.......special rates for special people, because they can, because they can afford it.;)

By all means tax the rich whilst alive.

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16 hours ago, tomandlu said:

Inherited wealth is becoming a bigger and bigger factor in deciding who is and who isn't rich - is that really what we want?

75% of wealthy families lose it all within 3 generations.

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14 hours ago, longgone said:

in some cases. in other cases it`s down to luck and hard work.  plenty people have worked hard and paid taxes why should taxes be paid twice on death. 

That's my point - that's becoming less and less true.

Besides, your position seems somewhat contradictory, and smacks of the pernicious assumption that somehow wealth incentivises the rich, but poverty incentivises the poor.

In a world of shrinking resources, wealth is now a zero-sum game - there is no incentive to be more productive if you've already got the lion's share (and you don't need to - wealth breeds wealth), and there's no incentive to be more productive if you are excluded from sharing in the value of that production. Inherited wealth just concentrates wealth.

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1 minute ago, Locke said:

75% of wealthy families lose it all within 3 generations.

That might have been true once, but it's no longer the case.

Can I recommend "Economyths" by David Orrell? He spends at least one section exploring the growing importance of inheritance vs earned wealth.

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2 hours ago, tomandlu said:

That's my point - that's becoming less and less true.

Besides, your position seems somewhat contradictory, and smacks of the pernicious assumption that somehow wealth incentivises the rich, but poverty incentivises the poor.

In a world of shrinking resources, wealth is now a zero-sum game - there is no incentive to be more productive if you've already got the lion's share (and you don't need to - wealth breeds wealth), and there's no incentive to be more productive if you are excluded from sharing in the value of that production. Inherited wealth just concentrates wealth.

whats the answer then ? pay more to workers so there lending limit goes up and wipes out the rise ?  

or pay more in tax credits so a 5k a year job is sufficient to live on ?

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I'd rather people could pass stuff on to their children than have the government hovering around waiting for them to die like vultures.

There are plenty of issues with wealth distribution. That people can inherit isn't one of them.

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9 minutes ago, longgone said:

whats the answer then ? pay more to workers so there lending limit goes up and wipes out the rise ?  

or pay more in tax credits so a 5k a year job is sufficient to live on ?

TBH, right now, I've no idea, but that is not an argument for the status quo. We have to build a sustainable economic system that responds to dwindling resources - capitalism can only 'work' with the assumption of continual growth.

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4 hours ago, tomandlu said:

That might have been true once, but it's no longer the case.

Can I recommend "Economyths" by David Orrell? He spends at least one section exploring the growing importance of inheritance vs earned wealth.

The American Dream of 'If I work hard one day I'll be rich too' is so deeply ingrained (there and here) it's incredibly difficult to convince people that no, in 2019 you can work as hard as you want (at your zero hours minimum wage no benefits jobs) but the stats show any progress you make will be minimal compared to the long-lasting inherited wealth of our overlords. 

I've reached the conclusion many people actively prefer being serfs - gaining more pleasure from the distant mirage of ultra-wealth (watching Kardashians while eating reheated plastic tray meals) than from any incremental improvement in their own reality. 

A society which allows billionaires the framework and safety to flourish, then runs a tax system that panders to their never-satisfied intergenerational Smauglike hoarding, while hospital wards are closed, council taxes goes up, bus services ended, elderly left unvisited, and the disabled driven to suicide is a pathetic bootlicking society of the meanest order.

Perhaps subservience is built into our genes. 

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1 minute ago, PeanutButter said:

The American Dream of 'If I work hard one day I'll be rich too' is so deeply ingrained (there and here) it's incredibly difficult to convince people that no, in 2019 you can work as hard as you want (at your zero hours minimum wage no benefits jobs) but the stats show any progress you make will be minimal compared to the long-lasting inherited wealth of our overlords. 

I've reached the conclusion many people actively prefer being serfs - gaining more pleasure from the distant mirage of ultra-wealth (watching Kardashians while eating reheated plastic tray meals) than from any incremental improvement in their own reality. 

A society which allows billionaires the framework and safety to flourish, then runs a tax system that panders to their never-satisfied intergenerational Smauglike hoarding, while hospital wards are closed, council taxes goes up, bus services ended, elderly left unvisited, and the disabled driven to suicide is a pathetic bootlicking society of the meanest order.

Perhaps subservience is built into our genes. 

So, what's the bad news?

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5 hours ago, tomandlu said:

So, what's the bad news?

Sadly, wearing hats has gone out of fashion so we are unable to doff them to the children of billionaires as much as would be desirable. :D

 

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Surely an inheritance is just additional income at the point of receipt by the benficiary.

Tax the income received. Simples! 

Ok so the inheritance assets will get put into Trusts but the benefit can't easily be realised without creating a taxable benefit.

 

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Taxing inheritance is unfair, money belongs to the family.

Tax what doesn't belong to the family : Land. Nobody owns land despite the belief we do, nobody created it, nobody owns it...well except God.

If you're occupying land you owe the rest of us compensation for restricting our freedom of movement and gathering of the resources. A Land Value Tax could replace Inheritance Tax, Council Tax and Stamp Duty. 

Difficult to hide land from the taxman as well. 😋

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Land is as much owned as anything else.

People created some of it, mostly in Holland. And elsewhere people put a lot of effort in to making it what it currently is.

We're already compensated for the lack of ability to trample over everyone else and to gather resources by not having to spend every waking minute gathering resources just to stay alive.

Land taxes strike me as very similar to inheritance taxes in that both are more about taking stuff off someone supported by people who don't have that stuff (and won't be getting it anyway).

I'd tax rent seeking on land though.

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On 04/04/2019 at 10:11, tomandlu said:

That's my point - that's becoming less and less true.

Besides, your position seems somewhat contradictory, and smacks of the pernicious assumption that somehow wealth incentivises the rich, but poverty incentivises the poor.

In a world of shrinking resources, wealth is now a zero-sum game - there is no incentive to be more productive if you've already got the lion's share (and you don't need to - wealth breeds wealth), and there's no incentive to be more productive if you are excluded from sharing in the value of that production. Inherited wealth just concentrates wealth.

Productivity is key.....too wealthy to need or want to be productive....the too poor to get a productive job just a non job, and there are those that are very productive but they are not paid......are they taking away the jobs of the would like to be paid to be productive?;)

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  • 295 Brexit, House prices and Summer 2020

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