More budget speculation

Albermarle

MX5huggy said:

At least my internal flight to COP26 will be cheaper 🤦‍♂️

I was going to cycle there, but now I will take the plane instead !

Probably the most illogical announcement in the budget .

michaels

Albermarle said:

MX5huggy said:

At least my internal flight to COP26 will be cheaper 🤦‍♂️

I was going to cycle there, but now I will take the plane instead !

Probably the most illogical announcement in the budget .

IF it was in some way linked to emissions so only the lowest emissions flights got the credit then it might make sense to incentivise innovation but otherwise, in Cop26 week - does not compute, presumably it is a bug to keep the airlines afloat but still.....

MaxiRobriguez

Triumph13 said:

Rather than remove the IHT break on DC pensions, it would be much simpler to just treat deaths at <75 the same as those at >75, with the obvious exception that you would still have an LTA test at the earlier of death / age 75.  That way the funds are always taxable income on withdrawal no matter who does the withdrawing.  We don't make DB survivors' pensions tax exempt no matter what the age at death. 

Maybe but you can't just introduce that without impacting a lot of people's carefully laid plans.

For example we have chosen less life insurance on myself in the expectation if I die at any point in the policy my wife will receive the full pension sum, which could be anywhere from £125k (if I die tomorrow) to £500k (if I die towards the end of the policy).

Yes we could buy more life insurance but it's a hassle and an additional cost borne that could have been better managed if pension taxation before 75 was known about. 

It wouldn't be so bad if the rule was applied to pensions opened after a certain (in the future date) rather than retrospectively applied to all. 

Albermarle

t wouldn't be so bad if the rule was applied to pensions opened after a certain (in the future date) rather than retrospectively applied to all. 

Pensions are complicated enough . It is the same issue with the discussions around moving the age to 57 but leaving some protected at 55 - more complications and the providers do not like it and the public get even more confused.

Malthusian

Triumph13 said:

Rather than remove the IHT break on DC pensions, it would be much simpler to just treat deaths at <75 the same as those at >75, with the obvious exception that you would still have an LTA test at the earlier of death / age 75.  That way the funds are always taxable income on withdrawal no matter who does the withdrawing.  We don't make DB survivors' pensions tax exempt no matter what the age at death. 

But lump sums from defined benefit schemes (death in service payments) are tax-free, so the rules are consistent - lump sum payments from pension schemes pre-75 are tax free whether DC or DB.

There is nothing stopping the Government from making them taxable, like spouses' pensions, but the Government has historically shied away from snatching bread from the widows and orphans of people who have died early.

Much of the debate about taxing death benefits from pensions is about post-75 benefits, not pre-75. Beneficiary's marginal rate of tax (with the option of keeping the death benefits in the pension wrapper to grow tax-free until they are drawn) seems much better than 40% Inheritance Tax. But on the other hand a married couple can leave up to £1 million tax free, so for anyone underneath the IHT threshold, the tax on pension death benefits is higher than on their own estate. Plus there is no spousal exemption as there is for IHT.