"Childless couples are being discriminated against when it comes to CAT"

[planck]

Group	Limit	Your relationship to the giver
A	€400,000	Child, Grandchild, if your parent has died and you are under 18, Foster child
B	€40,000	Brother or sister, Parent, Grandparent, grandchild or other relative you are directly descended from or who is directly descended from you, Niece or nephew, Equivalent relationships if you are a foster child
C	€20,000	Any relationship not in Group A or B

The above is the current situation, as a start perhaps Group A & B could be combined or even Group B & C (with higher limit)

 

[llgon]

The above is the current situation, as a start perhaps Group A & B could be combined or even Group B & C (with higher limit)

Or maybe leave well enough alone?

 

[T McGibney]

the changes in society since the days when family butchers were financially successful.

Butchering is still a highly lucrative trade.

But it takes a lot of effort to run a butcher shop.

 

[ClubMan]

Death?

Of both parents at the same time? Still a rare occurrence I would imagine?

 

[Purple]

The issue I’d see arising, however, is that most people view the €400k allowance to allow transfer of the family home

If the inheritor lives in the home and has done so for the last 4 (?) years then it’s their PPR and so they’d have no inheritance tax liability anyway. If it’s not their PPR then why should they inherit it tax free?

 

[Purple]

No. The obvious answer here is that State should stop wasting so much money.

Then taxes can fall for everyone.

I agree but that just not going to happen.
Even if it did I’d like to see taxes on work lowered to the same level as taxes on wealth first.

 

[Zion2022]

If it’s not their PPR then why should they inherit it tax free?

I personally don’t believe they should. I’m very anti inheritance tax exemptions & allowances generally. I’d probably vote for inheritance to be taxed as marginal income with exceptionally limited reliefs.

The point I was making is that is what most people believe. Politicians even referenced it when increasing the CAT A limit. So solving one groups gripe will just create another because all the dialogue around CAT is always grounded in emotion rather than any logic.

 

[faketales]

If the inheritor lives in the home and has done so for the last 4 (?) years then it’s their PPR and so they’d have no inheritance tax liability anyway. If it’s not their PPR then why should they inherit it tax free?

Whatever your views on CAT this exemption doesn't really reflect our current world.

Somebody's parent house is close to a city so the kids are living at home into their late 20s, lots of potential to save. It their PPR so inherit tax free.

Someone else needs to move out and rent as the commute would be too long, they are paying high rents for a room with little security etc.CAT limits apply.

I have no doubt people also fudge it if it comes to it a many dont see rented accommodation a their PPR even if it fits the criteria.

 

[T McGibney]

agree but that just not going to happen.

I think we will learn sometime in the next decade that not only is it going to happen but that it will happen - and the longer is is postponed the bigger the reckoning will be.

Capital taxes and personal income taxes are way beyond the point of sustainability at this stage and all I see now is a massive bubble.

I sincerely hope you're making adequate provision for your retirement, because the State sure as hell isn't.

I hope I'm wrong.

 

[Dr Strangelove]

I’ve read this whole thread and have changed my thinking a bit.

I think Group A to C should be merged and everyone should have a lifetime CAT-free allowance from all sources living and dead. There’s no good to privilege parents over aunts and uncles.

I would set the single lifetime threshold at about €250k with a 25% CAT rate. Tax systems are fairer and more sustainable when the base is broad and the rate is low.

All of the above are politically very difficult so I think we’ll muddle along with today’s system forever though.

 

[rob oyle]

I think Group A to C should be merged and everyone should have a lifetime CAT-free allowance from all sources living and dead. There’s no good to privilege parents over aunts and uncles.

This remains my viewpoint also - not throwing the baby out with the bathwater, but instead removing complexity by simplifying the existing categories into one. Is it not more equitable to have limits on untaxed received wealth - from whatever source - and there's no ambiguity about the relationship to disponers (and whether intermediary family members are living or dead) or what age you were when you received the gift?

As an aside, I don't think the tax on inherited wealth should be lower than the tax on earned income but again, that's an aside to the original topic here.

 

[T McGibney]

I would set the single lifetime threshold at about €250k with a 25% CAT rate. Tax systems are fairer and more sustainable when the base is broad and the rate is low.

... politically very difficult

That would be politically very difficult or rather impossible as the spectre of a child or teen orphaned in tragic circumstances having to pay ten grand on the inheritance of a €300k life policy could be enough to topple a government - and rightly so.

It's fine and dandy to have to pay CAT if your parents die while you are in your 50s or 60s. Less so after a tragedy in your youth.

 

[TomEdison]

That would be politically very difficult or rather impossible as the spectre of a child or teen orphaned in tragic circumstances having to pay ten grand on the inheritance of a €300k life policy could be enough to topple a government - and rightly so.

It's fine and dandy to have to pay CAT if your parents die while you are in your 50s or 60s. Less so after a tragedy in your youth.

Well, of course you'd have that situation already, if the life policy were for, say, €500k instead of €300k. You could address the problem with an increased threshold for inheritances taken while a minor.

Which thought gives rise to this fun (and not entirely serious) idea: Suppose there was a generous threshhold for inheritances taken while a minor, but then it declines on a straight-line basis as you age, reaching zero at age 65. This would incentivise parents to pass their assets to the next generation earlier rather than later, at a time when they were needed and could make a signficant difference to, e.g, buying a house, capitalising a business, paying school fees or whatever. There aren't the same societal benefits if I'm already at pension age when I inherit from my 90-year-old parents.

 

[Brendan Burgess]

I am glad that is not entirely serious.

A person could give their kids their assets and then be entirely dependent on the state for housing and care in their old age.

But there is an issue with very wealthy parents not passing on the wealth that they don't need until they die when it's of less use to the children.

 

[T McGibney]

Which thought gives rise to this fun (and not entirely serious) idea:

Why should it be a not entirely serious idea?

It makes perfect sense, and is reflected in the UK and other jurisdictions exempting gifts from tax.

 

[TomEdison]

I am glad that is not entirely serious.

A person could give their kids their assets and then be entirely dependent on the state for housing and care in their old age.

Well, it's not a simple binary — give everything you have, or nothing. If you have more than you require for modest comfort in your declining years, why not give some to the kids now rather than making them wait another two or three decades?

You wouldn't be entirely dependent on the state, since you would retain a certain amount. Plus, there could be an understanding with the kids that this works both ways — if the time comes when you need more than you have kept for yourself and by that time their own kids are grown and educated, they're expected to chip in.

 

[Corola]

Or marry them?

You can't marry your niece or nephew. Jeremy Irons floated a similar idea to avoid inheritance tax.

Jeremy Irons backtracks on gay marriage comments

Actor says he regrets suggesting gay marriage would make it tax-effective for fathers to marry their sons

www.theguardian.com

 

[T McGibney]

A person could give their kids their assets and then be entirely dependent on the state for housing and care in their old age.

But there is an issue with very wealthy parents not passing on the wealth that they don't need until they die when it's of less use to the children.

I have never see anyone in the UK complaining that the gift tax exemption there incentivises anyone to leave themselves fully dependent on the whims of the state in their old age.

 

[notsure1960]

Another issue is if you have an idiot child but clued in and hard working grandchildren,does one leave an inheritance to the child,who is going to blow it,or the grandchildren who will make productive use of it.

 

[Purple]

This would incentivise parents to pass their assets to the next generation earlier rather than later, at a time when they were needed and could make a signficant difference to, e.g, buying a house, capitalising a business, paying school fees or whatever. There aren't the same societal benefits if I'm already at pension age when I inherit from my 90-year-old parents.

If you consider an increasingly wealthy and proportionately small property owning class accumulating more and more wealth over generations then yes, it's a good idea.