Inheritance Tax (UK)

Greetings. All this talk about tax is rather taxing, is it not? Here in the UK your employer will file your taxes for you. Yeah. If you are self-employed the process is different, you do it yourself. Yeah, good luck with that mate. Like other European countries, (income) tax is pretty high. It is not unusual that you are taxed 40% of your income. Of course that depends on your earnings. But 40% is normal. Ouch. See why my people left the UK and and set up camp in the US so long ago? There were other reasons too, but tax was right up there.

So yeah, Inheritance Tax. The struggle is real. Inheritance Tax is a transfer tax  and was introduced into the UK in 1986, and replaced the Capital Transfer Tax. In brief, Inheritance Tax is paid if a person’s estate (property, money or possessions) is worth more than 325K when then die. It is called an ‘Inheritance Tax Threshold.’ The rate of Inheritance Tax is 40% on anything above the threshold. Yikes. Although, the rate may be reduced to 36% if 10% or more of the estate is left to a charity.

Who pays Inheritance Tax?

Usually the ‘executor’ of the will or the ‘administrator’ of the estate pays Inheritance Tax using funds from the estate. Also, you may have to pay Inheritance Tax if someone who died gave you a gift while they were alive. Again-ouch. Further, the executor of a will or administrator of an estate usually has to pay Inheritance Tax by the end of the SIXTH month after the person died.

Our Prime Minister, David Cameron is in a spot of bother of the moment with tax. It turned out that his Pa, now deceased had some shares abroad, which he gave to his son. And we found out about it via The Panama Papers. Gosh. The PM at first said it was a private matter, but now he has apologised and published his financial comings and goings. It has been rather taxing for him (and me too). It also came to light that his Mum recently gave him 200K-wow. Nice Mom. Many say it was an attempt to dodge Inheritance Tax. BTW £200K= $280KUSD. That is a lot of green stuff and an awfully nice gift.

Anyway, yesterday in London Town, our PM admitted to mishandling the backlash from the Panama Papers and said: “It has not been a great week. I know that I should have handled this better; I could have handled this better,” he said. “I know there are lessons to learn and I will learn them. Don’t blame No. 10 Downing Street or nameless advisers, blame me.” So, I guess he owned up to his mistake, but of course-had he revealed everything before he got found out-no apology would have been necessary. I just don’t know what to think.

While tax dodging is important there are far more important things going on. I mean, some schoolgirls in Africa were kidnapped a while back and still have not been returned their families. Planes have gone missing. And lots more awful stuff has happened. So it kind of makes tax dodging and Inheritance Tax look a bit ‘meh.’ That is all.

Cheers

 

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