Inheritance tax

[Ziggurat]

I think you're missing my point entirely.

Edit: You appear to be entirely hung up on the word "gift" because the USA has some tax called "Gift Tax", whereas I'm thinking more along the lines of your children having to pay a tax demand based on the box of Lego you gave them for Christmas.

The US is far from alone in imposing a gift tax, as my above link showed. And according to the tax code, the only reason you DON'T pay any tax on that gift of Legos to your child is because it's below the exemption amount, but there are exemption amounts for most estate taxes too, and typically much larger than the annual gift tax exemption.

 

[Darat]

We don't have any inheritance tax and go along just fine. I'm unsure if there should be one or not, but as it is clearly not a critical issue, I don't think it's very important. The idea of a 100% inheritance tax is ridiculous.

I am happy to say that any dead person that gets in touch with their relatives after their death should be allowed to decide what happens to any assets that they used to own.

 

[Darat]

The US is far from alone in imposing a gift tax, as my above link showed. And according to the tax code, the only reason you DON'T pay any tax on that gift of Legos to your child is because it's below the exemption amount, but there are exemption amounts for most estate taxes too, and typically much larger than the annual gift tax exemption.

No the reason you don't pay any tax on "Legos" is that there is no such thing. If you are both talking about LEGO that would be a different matter.

 

[richardm]

The US is far from alone in imposing a gift tax, as my above link showed. And according to the tax code, the only reason you DON'T pay any tax on that gift of Legos to your child is because it's below the exemption amount, but there are exemption amounts for most estate taxes too, and typically much larger than the annual gift tax exemption.

Forget it.

 

[Jaggy Bunnet]

But we DO have a gift tax. And as far as I can tell, most countries with an estate tax also have a gift tax. Here's some info from Europe. Only 2 countries out of the 29 listed (Malta and Romania) have an inheritance tax but no gift tax. 6 of the 29 have neither an estate or gift tax, and 22 have both (none have a gift tax and no estate tax). So the argument is not invalid, but rather seems to have been largely accepted implicitly already: very few countries don't treat these essentially equivalent activities (gifts before and after death) in fundamentally different ways.

As your link claims the UK has a gift tax, which is wrong, then I question how accurate the rest of the information it contains is.

What the UK does have is the ability for certain transfers during your life to be subject to inheritance tax or certain gifts made in the seven years prior to your death to be liable to inheritance tax. So at least one country treats these essentially equivalent activities within the same specific tax rules.

 

[Ziggurat]

As your link claims the UK has a gift tax, which is wrong, then I question how accurate the rest of the information it contains is.

What the UK does have is the ability for certain transfers during your life to be subject to inheritance tax

Then it's a gift tax (that is, a tax on gifts), even if you don't want to call it a gift tax. Your objection is purely a semantic one (and a rather silly one at that), and my previous link appears to be completely correct.

 

[Jaggy Bunnet]

Then it's a gift tax (that is, a tax on gifts), even if you don't want to call it a gift tax. Your objection is purely a semantic one (and a rather silly one at that), and my previous link appears to be completely correct.

No, it is not a tax on gifts, it is an inheritance tax. That you don't want to accept that is not my problem.

If you look at the title of the page you link to you will see it refers to inheritance tax and lists those gifts which are exempt from that tax.

You may also have spotted that this so called gift tax, at least as far as gifts to individuals are concerned, only applies once the donor dies (and only then if they die within a specified period of the gift, otherwise no tax is due). Kind of sounds like an inheritance tax really. Which is of course what it is.

And of course lets not ignore the fact that even those gifts (to non individuals, normally trusts) that are immediately taxable are only taxable to the extent they exceed the inheritance tax limit. And that to the extent you use that limit against such transfers, it is not available on death.

As I said, at least one country treats these essentially equivalent activities within the same specific tax rules.

 

[Ziggurat]

No, it is not a tax on gifts, it is an inheritance tax.

It is a tax on gifts. It's called the inheritance tax, but that's just the name. What it is is still a tax on gifts. The UK's own web site makes that quite plain.

That you don't want to accept that is not my problem.

No, your problem is that you cannot separate the name from the thing. You think that because it's called an inheritance tax, and is assessed under the same rules as the inheritance tax, it is therefore not a tax on gifts, even though it is explicitly a tax on gifts. And a tax on gifts is a gift tax.

If you look at the title of the page you link to you will see it refers to inheritance tax and lists those gifts which are exempt from that tax.

Which means that gifts which are not exempt are taxed. So it's a tax on gifts. And that is, by definition, a gift tax. What exactly did you think a gift tax is?

 

[Humes fork]

I am happy to say that any dead person that gets in touch with their relatives after their death should be allowed to decide what happens to any assets that they used to own.

I think that a dead person should have the right to make for the allocation of his/her money after death to relatives (or anyone else).

 

[Darat]

I think that a dead person should have the right to make for the allocation of his/her money after death to relatives (or anyone else).

As I said I'm fine with any dead person doing this, the problem would seem to be that there isn't actually a person left once the body has died.

 

[Humes fork]

As I said I'm fine with any dead person doing this, the problem would seem to be that there isn't actually a person left once the body has died.

The person can write a last will!

 

[Jaggy Bunnet]

It is a tax on gifts. It's called the inheritance tax, but that's just the name. What it is is still a tax on gifts. The UK's own web site makes that quite plain.

No, its a tax on inheritance. The website makes that very clear - in fact here is a quote from it, bolding added:

"However, you only need to worry about making gifts if you think your estate - including the value of any gifts you make - might exceed the Inheritance Tax threshold when you die. "

No, your problem is that you cannot separate the name from the thing. You think that because it's called an inheritance tax, and is assessed under the same rules as the inheritance tax, it is therefore not a tax on gifts, even though it is explicitly a tax on gifts. And a tax on gifts is a gift tax.

Your problem is you are wrong. It is not assessed under the same rules as the inheritance tax - there is only one tax and that tax is an inheritance tax. No matter how much you try and pretend otherwise.

Which means that gifts which are not exempt are taxed. So it's a tax on gifts. And that is, by definition, a gift tax. What exactly did you think a gift tax is?

I wonder why you edited out the bit that made reference to the fact that it applies on the death of the donor? Is it because that shows it to actually be an inheritance tax and not a gift tax and therefore proves you wrong? As does the quote from the HMRC website above. The reason certain gifts are included within the inheritance tax calculation is because there is NO gift tax - if there were no such rules then you would see a lot of deathbed gifts to avoid inheritance tax.

 

[Ziggurat]

No, its a tax on inheritance. The website makes that very clear - in fact here is a quote from it, bolding added:

"However, you only need to worry about making gifts if you think your estate - including the value of any gifts you make - might exceed the Inheritance Tax threshold when you die. "

Note the highlighted word: gifts. Your argument is basically that since gifts are included as a subset of inheritance, that this means that this is an inheritance tax instead of a gift tax. But that isn't so. It's still a tax on gifts. That one could also call it a tax on inheritance (by using a definition of inheritance which includes gifts) doesn't mean it's not still a gift tax. It is.

There's nothing complicated about this. It's a tax on gifts. Therefore, it's a gift tax, by definition. You have done nothing to demonstrate that there is no tax on gifts (quite the reverse, in fact), and you have proposed no alternative definition of a gift tax (that is, a tax on gifts) wherein a tax on gifts is not a gift tax. How can you fail at comprehending something so simple?

 

[Jaggy Bunnet]

Note the highlighted word: gifts. Your argument is basically that since gifts are included as a subset of inheritance, that this means that this is an inheritance tax instead of a gift tax. But that isn't so. It's still a tax on gifts. That one could also call it a tax on inheritance (by using a definition of inheritance which includes gifts) doesn't mean it's not still a gift tax. It is.

Is it also a house tax? And a medal tax? And a jewellery tax? And a car tax? And a designer dress tax?

It's an anti avoidance measure to make sure people don't give away or claim to have given away all their money just before death meaning no inheritance tax is due. A bit like how if your employer gives you a "gift" of your salary every month instead of a salary that is still taxable as employment income. Or are you going to claim income tax is a gift tax as well because it can apply to "gifts"?

There's nothing complicated about this. It's a tax on gifts. Therefore, it's a gift tax, by definition. You have done nothing to demonstrate that there is no tax on gifts (quite the reverse, in fact), and you have proposed no alternative definition of a gift tax (that is, a tax on gifts) wherein a tax on gifts is not a gift tax. How can you fail at comprehending something so simple?

There is nothing complicated, but you are wrong. What determines whether tax is payable is the death of the donor - its an inheritance tax.

Take two examples:

In the first a gift of £1m is paid and the donor survives for 10 years from the date of the gift. Nothing is taxable because it is not a gift tax.

In the second the same gift of £1m is made but the next day the donor dies. The full amount is taxable because it is an inheritance tax and the donor has died.

Same amount of gift, but the tax status determined by the death of the donor. Because it is an inheritance tax.

"Does the UK Have a Gift Tax?:
Currently the United Kingdom, including Scotland does not impose a gift tax, which is a tax on monetary gifts you bestow on others. This does not mean, however, that every gift will be tax-free. Depending on when you make a gift, it could be liable for the inheritance tax. "

http://www.scottishwillservices.co.uk/deathduty.html

"As outlined there is currently no gift tax in place in the UK however, there is a potential future liability for inheritance tax, when gifts are made, which would be payable on death."

http://www.accident999.name/tax.html

"At the present time, there is no gift tax in the UK. "

http://www.contestedprobate.co.uk/inheritance.html

"This is probably because the UK has no gift tax as such"

http://www.sykesanderson.com/Service_France/articles/french_gift_tax.asp

"In the UK there is currently no gift tax in operation"

http://www.willsprobate.co.uk/tax_planning.html

You'd better tell all these people, working professionally in the field, that they are wrong because they all state there is no gift tax in the UK. Maybe they are all wrong or lying on their websites, or maybe you are wrong. Which seems more likely?

And of course your conclusion from the report that incorrectly claimed the UK had a gift tax was that pre and post death gifts were treated in fundamentally different ways. Which is not consistent with both being subject to EXACTLY THE SAME TAX.

 

[ponderingturtle]

I'm not American, so your link doesn't apply, but even if it did it wouldn't change my opinion that it's wrong that the recipient should be expected to pay tax on a gift.

So you agree with Kent Hovind, he did not pay his staff just gave them gifts, so no tax there. People paid taxes on it before they donated it to him after all.

 

[stokes234]

I'm in favour of a higher inheritance tax - say, blank up to £250k, 50% over £250k, 60% over £500k, 80% over £1 million, but i'm not sure i'd go so far as to support 100% inheritance tax. I think there should be some exceptions and reductions though, such as for parents who die young enough to still have kids under 18.

 

[McHrozni]

If you want to live in a society, this society needs to create some income. Tax is very democratic, in principle.

Yes, but it is also impossible to tax in a way that can't legitemately be seen as unfair. Sure, there always are more fair and less fair options, but no option is completely fair.

I'm not arguing against taxes, they are necessary, but the term "fair taxes" is not. Each tax will be unfair to some and the best we can do is to ensure that taxes as a whole are roughly equally unfair to all.

McHrozni

 

[MRC_Hans]

I could, but I wasn't. It's not money, it's a possession, albeit one with a monetary value, as do most possessions.

It doesn't matter if it it money or material goods. Money is just standardized tokens for material (or immaterial) assets. Money has no value in itself. If your employer were to pay you in goods, you would still be liable to pay income tax.

My point is that the fact that somebody already paid taxes for something does not, as a basic principle, free you of tax, when you receive it.

The only kind of taxes that are only paid once are customs and value added tax.

Hans

 

[MRC_Hans]

Double...

 

[MRC_Hans]

Yes, but it is also impossible to tax in a way that can't legitemately be seen as unfair. Sure, there always are more fair and less fair options, but no option is completely fair.

I'm not arguing against taxes, they are necessary, but the term "fair taxes" is not. Each tax will be unfair to some and the best we can do is to ensure that taxes as a whole are roughly equally unfair to all.

McHrozni

Based on that argument, nothing is fair. Or we could put it upside down and equally well claim that from some POV, all taxes are fair.

Hans