MSE News: Pension inheritance tax to be axed

alanwsg

Doesn't this mean that if Granddad is 74 and has a substantial pension pot, there's a fair incentive to ensure he doesn't, umm, "make it to 75"?

Or have I mis-understood?

MartinW6

Your_Hero wrote: »

Sounds like your late father's pension was already in drawdown and she chose to take it as a lump sum, therefore a 55% tax charge applied. Why did she not seek advice at the time particularly as it was a "substantial" pension fund? She could have continued to draw the income subject to her own income tax rates which are far lower than a 55% charge (and she may have to pay income tax on the lump sum if it generates income now).

Unfortunately there isn't much that can be done now. The tax rate is correct on the option chosen.

Mum didn't seek advice as it was dad who dealt with all of their financal matters. Mum was utterly dependent on him in this regard. I also feel extremely guilty as she asked me for my advice and I didn't know enough to sway her away from taking a lump sum (dad's illness was prolonged, and keeping up with potential budget changes wasn't really on my mind at the time). I would have hoped that James Hay might have mentioned the proposed changes when we instructed them - perhaps they sent a letter advising customers of the tax changes being proposed; if so, I didn't see it.

SallyG

The speech in question - death tax changes at 39.20.
https://audioboom.com/boos/2519718-george-osborne-s-speech-to-the-tory-conference

jem16

MartinW6 wrote: »

I would have hoped that James Hay might have mentioned the proposed changes when we instructed them - perhaps they sent a letter advising customers of the tax changes being proposed; if so, I didn't see it.

Unless you were taking advice from James Hay they would not have mentioned it as the onus is on you to take appropriate advice before making such decisions.

Unfortunately there is nothing more can be done.

MartinW6

jem16 wrote: »

Unless you were taking advice from James Hay they would not have mentioned it as the onus is on you to take appropriate advice before making such decisions.

Unfortunately there is nothing more can be done.

Aye, I've come to that realisation. Might have a few sleepless nights coming up (hard to be philosophical when the figures in question are so high). Hopefully others haven't made the same mistake.

[Deleted User]

MartinW6 wrote: »

Aye, I've come to that realisation. Might have a few sleepless nights coming up (hard to be philosophical when the figures in question are so high). Hopefully others haven't made the same mistake.

Don`t look back, life is too short

Pincher

alanwsg wrote: »

Doesn't this mean that if Granddad is 74 and has a substantial pension pot, there's a fair incentive to ensure he doesn't, umm, "make it to 75"?

Or have I mis-understood?

I thought that was an elephant in the room as well.


If you had a £1million pension pot, and you don't touch it, because you have other money to live on, you can pass on £1.650million IHT tax free, because two parents can pass on a combined £650k. Coming up to retirement age, you would over stuff your pension pot, to attract as much tax relief as you can. The entire pension pot is now a tax avoidance vehicle, with lots of tax the Treasury has lost forever. So the 75 year rule tries to discourage you from using it that way.


They will have to add an amendment like if the deceased died by suicide, or "helped" to die, then they still want to claw back the tax in some way.


I would set up a human smuggling business, for "OAP tax dodgers" We fly them to Ecuador, the Philippines etc. and get Dr. Nicholas Rodriguez da Silva to issue a death certificate, and cremation papers. The children inherit the £1.650million, TAX FREE, yippee! Obviously I get a cut, the children get a cut, and the parents get an allowance to live out their days.

robin61

kittie wrote: »

absolutely fantastic news. It means that I don`t have to withdraw more then we need, just to squirrel some away for the children. It will help our children in the future. Wonderful speech today

Yes I think they have as well. Although I will have to wait until tonight to see the highlights of the speech. I am really hoping that we don't get a left wing government next who have already been talking about reducing tax relief and maybe even tax the presently TFLS. Just what prudent hard working people do not need !

atush

MartinW6 wrote: »

They were married, yes. James Hay, who dealt with my dad's pension, sent mum a letter explaining that she had two options; to cash-in (crystalise?) the privately invested pension (and incurr 55% tax) or keep it running. I'm not too sure about the ins-and-outs of the pension itself, and dad indicated that mum should receive 90% of it, but I'm presuming that James Hay knew what they were doing when they said that she was liable to 55% tax. Is it worth querying with them?

If the 55% tax was correct, does my mum have any options here, or does she have to swallow the hit?

james hay knew perfectly well, that your mother could have waited until April next year and had it w/o reduction. If they did not mention this, and she asked to do this After the budget announcement, then I would file a complaint with James hay.

She could have had the entire pension in her name, and kept it until april and then she could draw it down as she liked?

atush

jem16 wrote: »

Unless you were taking advice from James Hay they would not have mentioned it as the onus is on you to take appropriate advice before making such decisions.

Unfortunately there is nothing more can be done.

somehow I thought James Hay were giving the advice here. At least to the Father. Does this not give them a duty of care to the spouse? Did they not suggest she get advice?