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Proof the housing market has peaked


With a crooked smile
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sancho panza
4 minutes ago, Green Devil said:

The uk should do itself a favour. 

Get rid of iht altogether, and remove CGT on everything except 2nd homes or BTLs (they could double it on that). 

Savings taxes or at least the philosophy behind them, are at the root of our problems

The overly lenient treatment of BTL (and the philosophy behind it) are also at the root of it.

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Green Devil
2 minutes ago, sancho panza said:

Savings taxes or at least the philosophy behind them, are at the root of our problems

The overly lenient treatment of BTL (and the philosophy behind it) are also at the root of it.

Yep, take 20% of profits on investments from saving, then another 40% when you die. Robbers. Is any wonder the rich move to monaco? 

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Wight Flight
7 hours ago, sancho panza said:

Not as unlikely as you think in the south.Shitty terrace in Londinium bought for peanuts in 70's now worth a????.

Split 6 ways =£166k.

If you pay 40% tax on everything over £325k then =£118k each.That's a lot of money for msot people right there.

Exactly.

Totally unearned and untaxed wealth.

I see no reason it shouldn't be taxed.

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Sugarlips
57 minutes ago, Wight Flight said:

Exactly.

Totally unearned and untaxed wealth.

I see no reason it shouldn't be taxed.

Maybe it should be assessed based on the net worth of the recipient? 

I agree if a child inherited a house and they already own one outright that the tax is fair.

If however the child has been priced out for the last 20 years and been paying full rent ie has no real assets due to no fault of their own, they should be allowed to move to their parents house (in some cases their childhood home) without triggering an IHT event that might force them to sell said house (assuming it was the deceased's sole main asset).

If they then go sell the house within a short period then I agree that would trigger a taxable gain.

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haroldshand
8 hours ago, Wight Flight said:

Exactly.

Totally unearned and untaxed wealth.

I see no reason it shouldn't be taxed.

How many upper class families in this f*****g country have had a a massive advantage in life because of inheritance that one way or another seems to stay in the  family for centuries. Nearly every village I have lived in has had a bunch of self entitled pricks who always send their kids to the best schools and give them the best start in life.

The kid from the council gutter who worked his way out through hard work and  is not impossible, but the odds are with the posh toft with the handouts who have a cheek to whinge every day about crime rates and riff raff loitering around the villages in their white vans when they have never struggled a day

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Wight Flight
5 minutes ago, haroldshand said:

How many upper class families in this f*****g country have had a a massive advantage in life because of inheritance that one way or another seems to stay in the  family for centuries. Nearly every village I have lived in has had a bunch of self entitled pricks who always send their kids to the best schools and give them the best start in life.

The kid from the council gutter who worked his way out through hard work and  is not impossible, but the odds are with the posh toft with the handouts who have a cheek to whinge every day about crime rates and riff raff loitering around the villages in their white vans when they have never struggled a day

The kids go to the best schools because the grandparents pay for it.

This is a great way to avoid inheritance tax.

Very, very few parents actually pay their own kids school fees. Trust me on this.

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  • 5 weeks later...
Andersen

Anecdotal - a mate is looking to move and it looks like there's a boom now with folk rushing to beat the end of the stamp duty deadline. https://www.standard.co.uk/homesandproperty/property-news/house-prices-surge-stamp-duty-holiday-deadline-june-2021-b939166.html 

Property prices are nearly at their peak - unless there's another handout from the of the guardians of the free money tree 9_9 

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spygirl
57 minutes ago, Andersen said:

Anecdotal - a mate is looking to move and it looks like there's a boom now with folk rushing to beat the end of the stamp duty deadline. https://www.standard.co.uk/homesandproperty/property-news/house-prices-surge-stamp-duty-holiday-deadline-june-2021-b939166.html 

Property prices are nearly at their peak - unless there's another handout from the of the guardians of the free money tree 9_9 

Too late.

 

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No One
11 hours ago, Andersen said:

Anecdotal - a mate is looking to move and it looks like there's a boom now with folk rushing to beat the end of the stamp duty deadline. https://www.standard.co.uk/homesandproperty/property-news/house-prices-surge-stamp-duty-holiday-deadline-june-2021-b939166.html 

Property prices are nearly at their peak - unless there's another handout from the of the guardians of the free money tree 9_9 

your friend is a bit behind the curve.

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Castlevania

 

On 09/05/2021 at 17:46, haroldshand said:

How many upper class families in this f*****g country have had a a massive advantage in life because of inheritance that one way or another seems to stay in the  family for centuries. Nearly every village I have lived in has had a bunch of self entitled pricks who always send their kids to the best schools and give them the best start in life.

The kid from the council gutter who worked his way out through hard work and  is not impossible, but the odds are with the posh toft with the handouts who have a cheek to whinge every day about crime rates and riff raff loitering around the villages in their white vans when they have never struggled a day

They understand the rules of the game. Trust your children and pass down money well in advance of one’s death. The best way of avoiding inheritance tax is to be below the inheritance tax threshold by having passed it down either through large gifts or by paying for things such as school fees. Inheriting a load of money in your 50’s or 60’s is nowhere near as good in setting a child up for life as them receiving that in their 20’s or 30’s.

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VeryMeanReversion
12 minutes ago, Castlevania said:

The best way of avoiding inheritance tax is to be below the inheritance tax threshold by having passed it down either through large gifts or by paying for things such as school fees. 

I've spent a fair bit of time looking at this. My conclusions were...

1. As you say, stay below the threshold (make use of the house allowance)

2. Make use of SIPPs.  IHT free if dead before 75, tax-free transfer to another SIPP after that or withdraw at marginal rate (usually below the IHT rate)

3. Make use of annual gift allowances

4. Make use of "gifts from excess income". Structure investments to produce income rather than capital gains.  Solicitors don't mention this as it doesn't generate any fees.

5. Trusts are favoured by the solicitors for the fees but the more I check, the more I find that there are plenty of weasel words that don't guarantee they will work. So  they don't seem to be worth it unless you have many millions and can keep the assets offshore and well hidden.

 

 

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Castlevania
Posted (edited)
14 minutes ago, VeryMeanReversion said:

I've spent a fair bit of time looking at this. My conclusions were...

1. As you say, stay below the threshold (make use of the house allowance)

2. Make use of SIPPs.  IHT free if dead before 75, tax-free transfer to another SIPP after that or withdraw at marginal rate (usually below the IHT rate)

3. Make use of annual gift allowances

4. Make use of "gifts from excess income". Structure investments to produce income rather than capital gains.  Solicitors don't mention this as it doesn't generate any fees.

5. Trusts are favoured by the solicitors for the fees but the more I check, the more I find that there are plenty of weasel words that don't guarantee they will work. So  they don't seem to be worth it unless you have many millions and can keep the assets offshore and well hidden.

 

 

Or just give it away (gift money) a minimum of 7 years before you die. Then it’s exempt from inheritance tax. 

Edited by Castlevania
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Hancock
4 hours ago, VeryMeanReversion said:

5. Trusts are favoured by the solicitors for the fees but the more I check, the more I find that there are plenty of weasel words that don't guarantee they will work. So  they don't seem to be worth it unless you have many millions and can keep the assets offshore and well hidden.

In what way are trusts not water tight?

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VeryMeanReversion
2 hours ago, Hancock said:

In what way are trusts not water tight?

I have no idea. 

Its just something I noticed when reading about trusts various solicitors were offering that they always had some words that said they wouldn't guarantee that they would work.

It does seem to be a common thing with solicitors to get you to sign up for unlimited liability (to pay their bills) whilst they commit to nothing.

 

 

 

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Hancock
17 minutes ago, VeryMeanReversion said:

I have no idea. 

Its just something I noticed when reading about trusts various solicitors were offering that they always had some words that said they wouldn't guarantee that they would work.

It does seem to be a common thing with solicitors to get you to sign up for unlimited liability (to pay their bills) whilst they commit to nothing.

 

 

 

Aye they're scum.

Was thinking of a discretionary trust for my kid ... must be OK as the rich use them

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AlfredTheLittle
1 hour ago, Hancock said:

Aye they're scum.

Was thinking of a discretionary trust for my kid ... must be OK as the rich use them

The point of a trust is to protect the family wealth, for example if you wanted to give your daughter money but you didn't like her husband and were worried she might lose it all in a divorce.

There aren't really any tax advantages, discretionary trusts pay iht themselves, and in addition you've got ongoing admin costs.

Best way to beat iht is to give away cash more than 7 years before you die.

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Wight Flight
5 hours ago, AlfredTheLittle said:

Best way to beat iht is to give away cash more than 7 years before you die.

Nope.

Best way is to spend it all on enjoying  yourself before you die.

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wherebee
Posted (edited)
6 hours ago, AlfredTheLittle said:

The point of a trust is to protect the family wealth, for example if you wanted to give your daughter money but you didn't like her husband and were worried she might lose it all in a divorce.

There aren't really any tax advantages, discretionary trusts pay iht themselves, and in addition you've got ongoing admin costs.

Best way to beat iht is to give away cash more than 7 years before you die.

Trusts work when you have assets large enough to be able to absorb the fees from the trustees (professional trustees do a lot of critical stuff which your mate or most lawyers can't get right).

Example: I own a block of flats in London worth 100M.  I put it in a trust run by a professional firm.  The firm handles everything to do with the trust assets - tax, bills, repairs, etc etc.  The apartments in the block are rented out and all income and outgoings accrue in the Trust.  The Trust also has wording to permit the beneficiaries - my grandkids - to benefit on an ongoing basis as decided by the trustees.  The trustees let them live in one of the flats on a peppercorn rent, and give them an allowance from the trust and give a loan for university and living expenses charged at 1% per year.

When I die, the block of flats are unaffected by inheritance tax (under most countries laws) as the 'owner' of the flats has not died.  The loan and living expenses are not income as they are a loan, so the grandkids pay no income tax.  The trust pays some tax, but often less than an individual would.  Even better, the grandkids can't fuck up the family wealth by marrying and divorcing the wrong person, or smashing it all on drugs.

Compared to what a non-trust individual ends up with at the end of, say, a 50 year period, it's an incredible difference and a large reason why the rich can stay rich without too much trouble.  Most people in the UK have no idea how little tax all those trust fund kids pay.  They would riot if they did.

edit: seeing alfred says trusts are covered by IHT - some, but limited, and lots of ways to avoid it.  Moreover, the taxation on transfer is often at point of transfer, and ignores future capital gains unless realised, which in our example above will never happen.

https://www.moneyadviceservice.org.uk/en/articles/using-a-trust-to-cut-your-inheritance-tax

Edited by wherebee
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AlfredTheLittle
20 hours ago, wherebee said:

Trusts work when you have assets large enough to be able to absorb the fees from the trustees (professional trustees do a lot of critical stuff which your mate or most lawyers can't get right).

Example: I own a block of flats in London worth 100M.  I put it in a trust run by a professional firm.  The firm handles everything to do with the trust assets - tax, bills, repairs, etc etc.  The apartments in the block are rented out and all income and outgoings accrue in the Trust.  The Trust also has wording to permit the beneficiaries - my grandkids - to benefit on an ongoing basis as decided by the trustees.  The trustees let them live in one of the flats on a peppercorn rent, and give them an allowance from the trust and give a loan for university and living expenses charged at 1% per year.

When I die, the block of flats are unaffected by inheritance tax (under most countries laws) as the 'owner' of the flats has not died.  The loan and living expenses are not income as they are a loan, so the grandkids pay no income tax.  The trust pays some tax, but often less than an individual would.  Even better, the grandkids can't fuck up the family wealth by marrying and divorcing the wrong person, or smashing it all on drugs.

Compared to what a non-trust individual ends up with at the end of, say, a 50 year period, it's an incredible difference and a large reason why the rich can stay rich without too much trouble.  Most people in the UK have no idea how little tax all those trust fund kids pay.  They would riot if they did.

edit: seeing alfred says trusts are covered by IHT - some, but limited, and lots of ways to avoid it.  Moreover, the taxation on transfer is often at point of transfer, and ignores future capital gains unless realised, which in our example above will never happen.

 

Honestly, they're just not a tax dodge anymore don't do it! Trusts pay income tax at 45% then when the income is distributed the recipient can reclaim any overpayment based on their own tax rate. Trusts also have to pay iht every 10 years and also when assets are distributed 

https://www.gov.uk/guidance/trusts-and-inheritance-tax

Just not worth considering unless you're super rich as it would land you with big admin costs and headaches because you don't own your own property anymore.

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sancho panza
2 hours ago, AlfredTheLittle said:

Honestly, they're just not a tax dodge anymore don't do it! Trusts pay income tax at 45% then when the income is distributed the recipient can reclaim any overpayment based on their own tax rate. Trusts also have to pay iht every 10 years and also when assets are distributed 

https://www.gov.uk/guidance/trusts-and-inheritance-tax

Just not worth considering unless you're super rich as it would land you with big admin costs and headaches because you don't own your own property anymore.

very much echoes my experience of running a couple, back in the noguhties.Income tax was leveid at 32% but there was no icnome allowance iirc,or you got half the single persons.

Not tax effienct at all.

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wherebee

Did you miss the bit where I said 'when you have assets large enough'.

As expected, the rules have been tightened to catch the middle classes and upper middle.  The truely rich still make out like bandits with trusts, and they can afford the lawyers and trustees to get it right.

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haroldshand
On 08/06/2021 at 09:48, VeryMeanReversion said:

2. Make use of SIPPs.  IHT free if dead before 75, tax-free transfer to another SIPP after that or withdraw at marginal rate (usually below the IHT rate)

I half heartedly looked into this as I want and trust myself more with my pension fund than I do with these cowboys. But it seemed like every alternative I came up with was totally unacceptable.

Will have to dig deeper

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Interesting how the age at which we can take our pensions increases due to "people getting older" but the "IHT free if dead before 75" part of the equation seems to stay put at 75 years of age. Funny that.

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Frank Hovis
9 minutes ago, lid said:

Interesting how the age at which we can take our pensions increases due to "people getting older" but the "IHT free if dead before 75" part of the equation seems to stay put at 75 years of age. Funny that.

75 does seem to be a fixed point.

There is a plus with this in that if not working you can put in about £2.5k each year and still reclaim the tax up to 75.

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