Why the California is a third of the price for pensioners

[Amarillo]

Have you ever wondered how or why so many pensioners can afford to drive expensive cars like the California? The answer is simple - they are a nearly a third of the cost to many pensioners compared to people who might be considered high earners.

Inheritance tax is charged at 40%. A pensioner liable for this tax on death will receive £24,000 tax relief on their estate on a Cali purchase of £60,000; the real cost of the Cali is £36,000.

Meanwhile a high earner is taxed at 40%, so will need to earn £100,000 to make the same £60,000 purchase, almost 3 times the real cost of the pensioner's purchase.

Discuss...

 

[motacyclist]

Don’t quite follow that.

Is death duty different for pensioners?

 

[WelshGas]

Have you ever wondered how or why so many pensioners can afford to drive expensive cars like the California? The answer is simple - they are a nearly a third of the cost to many pensioners compared to people who might be considered high earners.

Inheritance tax is charged at 40%. A pensioner liable for this tax on death will receive £24,000 tax relief on their estate on a Cali purchase of £60,000; the real cost of the Cali is £36,000.

Meanwhile a high earner is taxed at 40%, so will need to earn £100,000 to make the same £60,000 purchase, almost 3 times the real cost of the pensioner's purchase.

Discuss...

Don’t follow this. Everyone is liable for Inheritance Tax when they die, even you!

What has being a Pensioner got to do with it?

 

[motacyclist]

Age envy!

 

[WelshGas]

Age envy!

Well he is in his fifties, so not too long to go.

 

[Ian789]

Think your maths is a bit dodgy Tom. The California is still part of the estate and if the estate was still over 450k (900k for a couple) then some inheritance tax would still be due. And looking at some of the valuations on here it's unlikely to have depreciated much. Only if the cali is worth £0 at that point would it have cost them only 36k. So they might as well get the enjoyment while they can. The taxman is coming after his share after all he's got to find the money for hs2 from somewhere so you 'in that there London' can get to Birmingham 20 minutes quicker

 

[Ian789]

They could of course fritter it away on wine, women and song and 60k would buy a lot of all 3 esp. Up t North.

 

[motacyclist]

Well

Well he is in his fifties, so not too long to go.

I couldn’t wait to be old to get a free bus to town and blow my £10 winter fuel allowance on a coffee and bacon bap; then pick up my free prescription on the way back!

 

[Amarillo]

Don’t quite follow that.

Is death duty different for pensioners?

If they have an estate in excess of £325,000, (£450,000 for main residence), yes.

 

[motacyclist]

If they have an estate in excess of £325,000, (£450,000 for main residence), yes.

But not much use to them when they have snuffed it? Benefit is to “children of pensioners? ....

 

[Amarillo]

Don’t follow this. Everyone is liable for Inheritance Tax when they die, even you!

No - not everyone. I narrowed the pensioner down to one "liable for this tax", one of the ~4%.

 

[Amarillo]

Well he is in his fifties, so not too long to go.

15 years, 4 months and 10 days to my state pension age of 67.

 

[Wobble’s Mum]

I don't get it.

I always (probably incorrectly) assumed that Cali drivers were older because a) they had more time on their hands than the rest of us to enjoy said vehicle, and b) probably didn't have massive mortgages like us 30 somethings and therefore had more disposable income or savings behind them.

 

[Borris]

Don't worry, there won't be any Inheritance Tax due on the £23250 you're allowed to keep after your nursing home has taken the rest.

 

[PhillyWilly]

Or they could lease a Cali. Money spent is a reduction in the estate for IHT and they never own it, not as much of a saving but surely bloody good fun. Alternatively, they could buy a Cali, and gift it to charity (or a political party ) on their death. Not exactly sure what a charity would do with it but surely everyone wants one?

 

[Joker 1299]

Tom, you have too much time on your hands. Go back on tour.

 

[Amarillo]

Think your maths is a bit dodgy Tom. The California is still part of the estate and if the estate was still over 450k (900k for a couple) then some inheritance tax would still be due. And looking at some of the valuations on here it's unlikely to have depreciated much. Only if the cali is worth £0 at that point would it have cost them only 36k. So they might as well get the enjoyment while they can. The taxman is coming after his share after all he's got to find the money for hs2 from somewhere so you 'in that there London' can get to Birmingham 20 minutes quicker

That is a good point. A person whose estate is liable for IHT will get better value by spending their money on a holiday in California than a holiday in a California.

 

[soulstyledevon]

The Inheritance Tax threshold is an utter disgrace...!!!
Surely the goal posts need to move, north of £1m, in this day and age.

 

[Amarillo]

The Inheritance Tax threshold is an utter disgrace...!!!
Surely the goal posts need to move, north of £1m, in this day and age.

I do not see the survivor of a rich person any more deserving of a tax free windfall than the survivor of a pauper. But such a discussion is beyond the scope of this thread.


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[johnyboy]

Pay tax on what you earn all your life, pay tax on (most) of what you buy all your life, get your kids to pay tax on what gets left when you die..... third bite of the cherry!

 

[motacyclist]

Pay tax on what you earn all your life, pay tax on (most) of what you buy all your life, get your kids to pay tax on what gets left when you die..... third bite of the cherry!

Someone’s got to pay for the kids iPhones and Sky subscriptions for those poor souls on benefits!

I know of someone with a “disability” who gets a total of £2500 monthly benefits, has full Sky, latest Samsung top line smartphone, three horses and appears to have no apparent disability when she jogs alongside them in the ring!

 

[GrannyJen]

I was a pensioner when I bought my California.

I bought a Cali because I had a lot to see and do, because my 5th attempt at retirement was proving successful and I had the time to do lots of things that I wanted to. I also have had enough of aeroplanes, cruises bore me sick so my travel was to be largely confined to 4 wheels.

My Cali cost the same as everyone elses. Inheritance tax planning for me was absolutely no consideration at all as most of my estate is bound up in fixed assets such as my house which I had no intention of selling.

I had to buy it out of disposable income which as a pensioner is obviously a fairly restricted budget.

 

[T6 CFO]

I presume your bored Tom.

It’s certainly got a great deal less to do with your suggestion than a zillion other factors.



Mike

 

[WelshGas]

Wait until his kids become Teens. He won't have so much time on his hands for such inane posts.

 

[Amarillo]

I presume your bored Tom.

It’s certainly got a great deal less to do with your suggestion than a zillion other factors.

Doh! So next time I suggest to my mum that she pay the £6 price of our two lattes and shared chocolate muffin at Costa on the basis that the cost to her estate is £3.60 and the cost to me in labour is £10, I am doing something other than offering sound financial advice?





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