OV9

ZedLeg wrote: Tue Nov 05, 2024 10:14 am Isn’t most of their land in London?

Different loophole?

Yes, he's not an example of a farmer. He is an example of someone with a large estate who successfully avoided IHT.

Jobbo wrote: Tue Nov 05, 2024 10:10 am

ZedLeg wrote: Tue Nov 05, 2024 10:09 am It’s funny, when I used Clarkson as an example on twitter he was also a bad one and I should’ve been looking at folk like James Dyson.

I wonder who a good example would be, King Charles?

Duke of Westminster...

https://www.theguardian.com/money/2016/ ... y-billions

Yes I was wondering when someone would mention him. He's worth billions, owns swathes of the poshest parts of London, and yet didn't the estate didn't pay IHT when his Dad died. Something deeply wrong there!

And yes, Clarkson was honest about why he bought the farm, but it was tenanted when he bought it and now he's running it as a farm himself, so not sure of the issue here?

I don't know the details of Dyson so I won't comment.

I think IHT is inherently unfair because the taxable event is death. With CGT you've likely sold some shares, or a house, or a business, or whatever. So there is a deliberate event that ended in a liquidation. However, death is unavoidable. And if there was a feeling that the state spends money responsibly and solemnly then I don't think people would mind as much, but there are so many examples of them literally pissing it up the wall that people get angry.

I think I'm done talking about IHT. Those on either side of the debate rarely change their perspective (apart from the grads working out of my fathers office some years ago when they released they'd have to write a cheque when their parents died). However, loophole or not, the government have fudged this one badly, like they fudged WFA for pensioners. Regardless of the arguments either way they could've done this better.

Simon wrote: Tue Nov 05, 2024 10:54 am Yes I was wondering when someone would mention him. He's worth billions, owns swathes of the poshest parts of London, and yet didn't the estate didn't pay IHT when his Dad died. Something deeply wrong there!

It's all in trust though with him, so tax will be paid in a different way.

Simon wrote: Tue Nov 05, 2024 10:54 am
Yes I was wondering when someone would mention him. He's worth billions, owns swathes of the poshest parts of London, and yet didn't the estate didn't pay IHT when his Dad died. Something deeply wrong there!

Trust funds appear to be a whole other (massive) loophole. 40% IHT on his £9.4billion would almost solve the UK budget "black hole" that we're all now facing the consequences of....

Would the UK be better off if every HNW individual domiciled in tax havens?

Mito Man wrote: Tue Nov 05, 2024 11:49 am Would the UK be better off if every HNW individual domiciled in tax havens?

You know the answer to that. The issue is one of consistency however.

Mito Man wrote: Tue Nov 05, 2024 11:49 am Would the UK be better off if every HNW individual domiciled in tax havens?

Reeves thought of that - did you not notice the budget announcement that the concept of domicile was being revoked and residency will be the sole test? https://www.gov.uk/government/collectio ... ndividuals

Just going back to Simon mentioning Clarkson and his farm. He bought a farm as an IHT dodge. Becoming a (pretty bad) farmer does not make him anything like the farming families who have done nothing but farm the family farm their whole lives, and it passes down to the kids who do the same. Those are the people whose situation is being used to justify Clarkon's tax dodge, yet they're the ones who are probably not affected by the changes anyway; they don't have massivey valuable potential development sites in the Cotswolds, they have productive rural land in Lincolshire or wherever. The two are very different.

Jobbo wrote: Tue Nov 05, 2024 10:03 am

mik wrote: Tue Nov 05, 2024 9:17 am Like some others however I object to IHT in principle. It's a tax on wealth that has already been taxed multiple times. For your house (the primary trigger of IHT for the vast majority) all your earnings that allowed you to purchase the property have already been taxed, and the purchase of the property was also subject to chunky Stamp Duty (or rather chunkier LBTT in Scotland). And then you pay huge tax on this again after you die? That appears fundamentally wrong to me.

VAT paid on goods out of taxed income, CGT on items which were paid for from taxed income - there is no intrinsic rule that you only get taxed once.

Agree that with the existence of VAT, a "tax on already taxed income" is a norm for us all. For your property however IHT is further layer of significant tax on an asset that you were already taxed to purchase, using your already taxed income.

mik wrote: Tue Nov 05, 2024 11:21 am

Simon wrote: Tue Nov 05, 2024 10:54 am
Yes I was wondering when someone would mention him. He's worth billions, owns swathes of the poshest parts of London, and yet didn't the estate didn't pay IHT when his Dad died. Something deeply wrong there!

Trust funds appear to be a whole other (massive) loophole. 40% IHT on his £9.4billion would almost solve the UK budget "black hole" that we're all now facing the consequences of....

They do pay tax. Just not in the same way

Swervin_Mervin wrote: Tue Nov 05, 2024 12:13 pm

mik wrote: Tue Nov 05, 2024 11:21 am

Simon wrote: Tue Nov 05, 2024 10:54 am
Yes I was wondering when someone would mention him. He's worth billions, owns swathes of the poshest parts of London, and yet didn't the estate didn't pay IHT when his Dad died. Something deeply wrong there!

Trust funds appear to be a whole other (massive) loophole. 40% IHT on his £9.4billion would almost solve the UK budget "black hole" that we're all now facing the consequences of....

They do pay tax. Just not in the same way

Yeah sorry - I know trusts aren't tax free. Whilst I am not a tax expert, I am going to assume they provide an option that is more favourable from a tax perspective.

mik wrote: Tue Nov 05, 2024 12:16 pm

Swervin_Mervin wrote: Tue Nov 05, 2024 12:13 pm

mik wrote: Tue Nov 05, 2024 11:21 am

Trust funds appear to be a whole other (massive) loophole. 40% IHT on his £9.4billion would almost solve the UK budget "black hole" that we're all now facing the consequences of....

They do pay tax. Just not in the same way

Yeah sorry - I know trusts aren't tax free. Whilst I am not a tax expert, I am going to assume they provide an option that is more favourable from a tax perspective.

It's arguably more sensible than one massive lump at death - it's effectively more a wealth tax, that enables that wealth to be retained and guarantees future tax revenues from it.

I wonder what the effects would be if we ditched IHT and moved to a 6% tax on assets every 10yrs?

I had always assumed that these “tax management” / Loopholes (delete as appropriate) were intended to be a bit of a compromise.

Some tax revenue is better than none. Most people who avail of these sorts of schemes have the means and will to move all their wealth out of the reach of HMRC if pushed. They don’t because a. It’s a hassle and b. The tax burden is seen as OK, reasonable, acceptable etc.

If you push and push to the point where it’s no longer seen as reasonable or acceptable, the outcome is obvious

Well according to Brusselsreport.eu (no idea if it’s a useful website or taking bs) and Google ai (ditto) the introduction of a wealth tax in Norway resulted in a reduction of $500mn in tax revenue.. maybe not such a great idea then!

IanF wrote: Tue Nov 05, 2024 1:39 pm Well according to Brusselsreport.eu (no idea if it’s a useful website or taking bs) and Google ai (ditto) the introduction of a wealth tax in Norway resulted in a reduction of $500mn in tax revenue.. maybe not such a great idea then!

Yeah, they take into account everything when you pay tax and it’s pretty mean. Although oddly it works with debt, so if you add a big mortgage, car payments etc you can reduce your tax burden. It’s still stupid levels but they have a relatively small and efficient welfare system and a very efficient government. Considering the spread of people over the country it makes the U.K. look like a big fat wasteful pudding of public nose bags.

Dave!

Harry has his say.

Did he mention the fertiliser tax? We'll just end up importing all our food in the future... At a greater cost.
On a slightly positive note we will now get to witness Starmer et all kissing Trump's arse to get some better deals. Couldn't happen to a more deserving bunch

Harry’s figures are high again. 500 acres? How much land does he farm? I thought it was a fair bit smaller than that, more like 250 acres including the steep bits and areas that flood which aren’t usable farmland. If the ‘family farm’ is that size, at ~£10,000/acre it’s £2.5m and therefore within the combined £1m each farm IHT allowance plus £325k each normal IHT allowance (total £2.65m free of IHT).
It isn’t reasonable to allow for a £2m country pile on top; that’s not really a farmhouse and should quite reasonably be treated as any other expensive family house. Equipment; well Harry has acknowledged that most farms his size don’t have a combine etc, and a depreciated tractor and drill won’t be even £100k on the probate forms.

Any bigger farm which needs to own the plant is going to be running as a full on business and should be structured as such. I still genuinely think the new rules probably just about hit the right mark. However, I can think of a gloss on it: impose IHT on the farmhouse but allow all farmland and agricultural buildings to be exempt from IHT. Wouldn’t take too much extra work and would address the concerns about families losing their working farms.

Jobbo wrote: Wed Nov 06, 2024 10:53 pm Harry’s figures are high again. 500 acres? How much land does he farm? I thought it was a fair bit smaller than that, more like 250 acres including the steep bits and areas that flood which aren’t usable farmland. If the ‘family farm’ is that size, at ~£10,000/acre it’s £2.5m and therefore within the combined £1m each farm IHT allowance plus £325k each normal IHT allowance (total £2.65m free of IHT).
It isn’t reasonable to allow for a £2m country pile on top; that’s not really a farmhouse and should quite reasonably be treated as any other expensive family house. Equipment; well Harry has acknowledged that most farms his size don’t have a combine etc, and a depreciated tractor and drill won’t be even £100k on the probate forms.

Any bigger farm which needs to own the plant is going to be running as a full on business and should be structured as such. I still genuinely think the new rules probably just about hit the right mark. However, I can think of a gloss on it: impose IHT on the farmhouse but allow all farmland and agricultural buildings to be exempt from IHT. Wouldn’t take too much extra work and would address the concerns about families losing their working farms.

“It’s not a house, it’s a really posh barn”

My first thought was we’re going to see canopy barns going up suspiciously around houses

Jobbo wrote: Wed Nov 06, 2024 10:53 pm Harry’s figures are high again. 500 acres? How much land does he farm? I thought it was a fair bit smaller than that, more like 250 acres including the steep bits and areas that flood which aren’t usable farmland. If the ‘family farm’ is that size, at ~£10,000/acre it’s £2.5m and therefore within the combined £1m each farm IHT allowance plus £325k each normal IHT allowance (total £2.65m free of IHT).
It isn’t reasonable to allow for a £2m country pile on top; that’s not really a farmhouse and should quite reasonably be treated as any other expensive family house. Equipment; well Harry has acknowledged that most farms his size don’t have a combine etc, and a depreciated tractor and drill won’t be even £100k on the probate forms.

The above is out of date already sadly Simon. That carry over to a spouse has been nixed which clearly is going to bring a lot more people within scope. Again, rules out my point 1 (good explanation) of Dan Neidel's advice because he wasn't actually working off what the new rules will be but an assumption they wouldn't change the status quo (call the indemnity insurers!)

I was discussing the whole situation with my father last weekend - house over the exemption threshold, family business that would now be taxed and personally administered pension which will now be taxed. This was one of things I was pointing out - that in reality you can't plan for the fickle vagaries of governments in the future because what you thought may be the case may well turn out not to be. He has life insurance to cover IHT on the house to 75, which I pointed out will hopefully be worthless. As the scope of how it will affect him has greatly multiplied he's starting to listen to my advice that his tax planning is completely inadequate.

The safest way of really avoiding being caught by IHT is to structure things to ensure you (i.e. he) do not own the assets. If you're passing anything on at the point of death you may well be shafted if a Corbyn-esque character is in in power at the time and they've decided IHT is 90% or that the passing on of exemptions between spouses disappears for personal homes as they've just done for farms. Yes there is the the lookback rule but overall I think it would be administratively very difficult to instigate any real clawback of assets that have already transferred years ago. Yes you could start taxing gifts but then I think there would likely be a prime minister's head on a pike in Spitalfields market - at least if people take steps to transfer lock stock and barrel now, the chances of such gifting tax being levied retrospectively are low.