Inheritance tax sparks rental crisis as landlords hit by frozen thresholds

Reply to the comment left by NewYorkie at 17/12/2024 - 11:19
Yes, I believe that's right but the way in which it works in practice seems quite complex.

Reply to the comment left by Cider Drinker at 16/12/2024 - 10:07
I understand that the tax will need to be paid prior to probate being granted.
Without probate, no sale can be entered I to.
If correct this will be a big problem.
It seems better to keep 40 % ( or so) of the net portfolio value in an ISA etc and have mortgages.
Then you (executor) can access the funds quickly to.pay probate.
I'm not an expert and iam posting to get some opinions.

If you sell with a gain before you die, you will have CGT. CGT at 24% and IHT at 40% combine to make 55.6% tax.

Reply to the comment left by Seething Landlord at 16/12/2024 - 12:24
SL, nice to see you are up to date on the intricacies of IHT.

As you say, landlords have not simply done nothing and laid out the welcome mat for HM Treasury and various Chancers (sorry Chancellors). However, landlords have allowed tin-eared government (national and local) to divide and conquer us and use the PRS as a cash cow with no regard for unintended consequences.
It's all well and good for keyboard warriors to post their views to the converted on forums such as this, but the PRS needs better sign up to groups advocating for landlords. The most recent English Housing Survey shows 93% of landlords are individuals and "As in 2021, the majority of landlords (71%) reported no current or previous membership of any organisation."
https://www.gov.uk/government/statistics/english-private-landlord-survey-2024-main-report

While iHowz did not submit a specific paper to Rachel Reeves for her to file in a black hole, iHowz have been raising items from their tax agenda as part of their campaigning on the RRB.

You can see the last iHowz tax paper here
https://ihowz.uk/ihowz-submission-to-hmrc-in-respect-of-the-spring-budget/
and find details of specific issues raised more recently in our RRB campaign articles.

iHowz continue to push for a consistent tax treatment of PRS landlords that recognises residential landlords as business owners.
This includes eligibility for BADR, business asset disposal relief, (CGT) and business relief (IHT), which other business owners and investors enjoy. We have also suggested that the SDLT surcharge (now 5%) should be recoverable against rental profits on the property, reducing this major disincentive to invest in providing decent homes.

While it is hoped that the government's first cut was the deepest, It has also fallen on many of our more vulnerable tenants, with LHA rates frozen (again), and pensioners suffering the double whammy of losing winter fuel payments, followed by joining the growing number of people taxed due to frozen thresholds.

Those worried about the taper reducing the threshold during the seven year period should remember that regular payments from income is another option.
https://www.gov.uk/inheritance-tax/gifts

Interested in Joining the Team at iHowz?

If you, or someone you know, want to help put the case for landlords, iHowz are looking for people to join the team.

While property rental experience would be good, we welcome enquires from those with other skills, such as digital, publishing and social media, marketing, administration and presentation.

Roles are a mixture of paid and unpaid, dependent on skills, experience and hours.

If this is of interest, why not take five minutes to let us know what you think we could do better and how you could help us achieve it.
email: info@ihowz.uk

Either way, you and your landlord friends are welcome to join us as members
https://ihowz.uk/

Reply to the comment left by steve watt at 21/12/2024 - 08:26
CGT dies with you. The only CGT an inheritor may have to pay is if they sell, and a gain occurred from the time of death of a person. Only IHT kicks in.

Reply to the comment left by Yvonne Francis at 21/12/2024 - 15:32
I think Steve was referring to Cider Drinker's comment, that they were going to have to sell up before they die as their beneficiaries don't want to be landlords. That would incur both the CGT to Cider Drinker & then the IHT to their beneficiaries eating into their lifetime's work rather significantly.

It is quite likely that all my tenants will be made homeless when I die. My properties are all mortgaged, and the additional burden of IHT will make them uneconomic to rent out. I would have liked to have prevented this by moving some across to my beneficiaries now, by way of a gift and moving the equity around, but as others have said, this will trigger CGT as well.
Doubtless the lefty press will blame me for not planning properly, and 'why was this allowed', but it has arisen as a result of house price inflation, fiscal drag and the freezing of IHT thresholds. Irresponsible landlords will nevertheless get the blame.

Reply to the comment left by Kate Mellor at 21/12/2024 - 19:33
Thanks Kate: I did not read it properly. That's why I'm trying to keep my houses until I die so only one tax is paid even though disadvantages have been pointed out to me on 118.