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SIPP How can I avoid IHT ?
hoodedclaw79
Posts: 12 Forumite
Hi
Is there anyway myself and my brother can avoid paying 55% on my dads SIPP when inherit his estate? Sorry to sound a bit cold but I can't stand to think my dads money that has already paid tax on going back to the tax man.
Thanks
Neil
Is there anyway myself and my brother can avoid paying 55% on my dads SIPP when inherit his estate? Sorry to sound a bit cold but I can't stand to think my dads money that has already paid tax on going back to the tax man.
Thanks
Neil
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Comments
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"my dads money that has already paid tax on": if it's in a SIPP he didn't pay tax on it. That's the whole point.Free the dunston one next time too.0
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The 55% isn't IHT, the pension does not form part of his estate. The 55% level is about what it needs to be to prevent excessive pension savings being used as a tax avoidance scheme.0
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Is there any way to avoid the 55% though? Could my dad change the dependents name or add myself and my brother to the SIPP so it will continue after my dads passing(hopefully not for a good few years)
Thanks0 -
excessive pension savings
Who says what's excessive and what isn't? We already have annual and lifetime caps.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
hoodedclaw79 wrote: »Is there any way to avoid the 55% though?
Has he already started to drawdown the SIPP?
Are you and/or brother over the age of 23?
This might help.
http://www.hl.co.uk/pensions/income-drawdown/what-happens-when-i-dieI am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »Who says what's excessive and what isn't? We already have annual and lifetime caps.
By excessive I mean money deliberately held in excess of that required to provide for the pension holder and dependents.0 -
By excessive I mean money deliberately held in excess of that required to provide for the pension holder and dependents.
Even if someone uses the full lifetime allowance, at a 4% drawdown, that's only £60k pa before tax. OK, so that's a fair bit, but if someone has been living on more than that, and has high property etc. bills, then why shouldn't they be able to save enough to provide for themselves in retirement?
Anyway, it looks like I'm hijacking the thread, which wasn't my intention.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
hoodedclaw79 wrote: »Is there any way to avoid the 55% though? Could my dad change the dependents name or add myself and my brother to the SIPP so it will continue after my dads passing(hopefully not for a good few years)
Thanks
Only if you were a genuine dependent.
I guess the way to minimise tax is for your father to convert it to an annuity and then pay you completely out of income, and hope he lives long enough to make the annuity worthwhile. In this way he would pay income tax, but the payment could not be considered part of his estate for IHT. Its a guess though - I am not a tax expert.
PS Another guess - that may work with drawdown as well. But either way he would be eating into his currently available income which may well not be what he wants.0 -
gadgetmind wrote: »Has he already started to drawdown the SIPP?
Are you and/or brother over the age of 23?
He has started to draw down and both myself and my brother are over 23,what effect does this have?0 -
hoodedclaw79 wrote: »He has started to draw down and both myself and my brother are over 23,what effect does this have?
My understanding, which you obviously need to verify, is that you will find it hard to argue that either of you are dependants so you won't be able to simply start taking an income from the SIPP.
If the pension is fully crystalised (you can segment it and keep taking PCLS from segments as they are moved to drawdown/annuity) then I don't know of any way to avoid that tax charge.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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