yes!!!!!

DreZZ

kinger101 said:

bearshare said:

Am I missing something? Surely, if you build up a large pension, with HRT relief on the way in, then you will be paying HRT on most of it 'on the eay out'. (Ignoring company contributions). I.e. no benefit to paying in, beyond the - limited - tax free lump sum. 

Well, you'd unlikely be paying HRT on a pot of £1,073,000 if you wanted it to last.  Most people would probably retire by the time the uncapped LTA reached levels where their drawdown or annuity exposed them to HRT, but that number is much higher than the current limit.

If you have the £1073k DC pot as you say and have a full state pension, you may quite easily be a higher rate tax payer.  Particularly if you are resident in Scotland as I am.
Factors that may drag you into HRT
a) SIPP is fully crystallised - no more PCLS
b) Being in receipt of a DB pension
c) Being in receipt of the SP
d) Fiscal drag of frozen tax rates over time
e) The amounts of money you need to take from the drawdown account

kinger101

Most people with that size pot will retire way before SRA.  Even being in Scotland, you can pull out about 58k a year and remain under hrt threshold.

BeatTheSystem

I have fixed protection at £1.5M allowing me to take 375K tax free. 

I note that for those without fixed protection the TFLS is to be capped at 25% of the current LTA.

There are two scenerios I am considering. 

1. Dont make any further contributions and therefore no break fixed protection. I take 375K and I assume no LTA charge on the residual drawdown pot. But maybe I am wrong about this, perhaps fixed protection must respect the LTA.

2. I make further contributions thereby breaking FP and I assume then I can only take 268K tax free and no LTA charge on the residual drawdown pot but would benefit from the tax relief on future contributions. The difference between 375 and 268 is approx 107K, so I would need tax relief of this ammount to break even and at 40% tax relief this amounts to contruntions of 267K. 

Scenerio 2 is probably not worth it and should stick to 1. 

There is always a catch.

p.s. any free money is not likely to make me want to stay in or go back to work.

drjohn67

It is a free market for medicine.
Anyone can study from 13-14 yoa - consistently achieve highest results, 5 years in university, 6-10 years or more postgraduate training/study in your spare time after working full time hours and paying thousands on exam fees and membership of professional colleges.

Why not try it?

Regarding the free market.

They massively expanded training numbers to increase supply of dr which should have reduced the value of the asset ie doctors. It didn’t because they couldn’t retain enough doctors. They can’t attract enough suitable doctors from overseas. That is why there is budget action now to avert losing even more in the next 1-2 years - averting / delaying a critical failure of the NHS.

I left and find comments such as that amusing :-)

Sterlingtimes

cfw1994 said:

He was pretty straightforward about it.   "I will abolish the LTA altogether".

Great reform, IMHO......removes a bunch of complexity in one fell swoop.
I appreciate others may disagree.

Put "I will abolish the LTA altogether" into Google. 

BuildTheWall

ukdw said:

Notepad_Phil said:

caveman8006 said:

The key question for me is what should people like me be doing? I have crystalized 100% of the existing LTA and was in the habit of taking a taxable income from the drawdown account to take my total earnings up to the higher rate limit (so as to avoid the threat of an LTA tax on any growth in the pot at 75, particularly when receipt of the State pension would have  severely constrained basic rate withdrawals between 67 and 75). Am I now safe in leaving the drawdown pot to grow as a potential IHT-free inter-generational transfer?   

Future governments can always make whatever changes they want, so I would never say anything is completely safe, but it appears to be safer now then it was pre-budget.

Rather than tinkering with the LTA - I suppose future governments might instead tinker with the £268k max figure.  
Or potentially re-introduce the LTA again.

So might be worth considering fully crystallising before the next government change, and therefore also fully using the £268k PCLS limit.

LTA won’t be re-introduced. It’s just too complex to administer and comes with a lot of historical baggage. 

More Likely is pensions brought under IHT. 

NoMore

BuildTheWall said:

LTA won’t be re-introduced. It’s just too complex to administer and comes with a lot of historical baggage. 

More Likely is pensions brought under IHT. 

I agree, LTA was too complicated a tax and IHT protection is likely to be capped next, with also the max tax free cash being deflated in real terms as its not increased by successive governments.

najan49

drjohn67 said:

IHT and pension.

Tax is typically paid on the lump sums when they are drawn down by the those inheriting.

1. If you die <75 it is tax free though that saves approx 10 years of state pension and in part compensates your family as they may still have been receiving support.

2. If those inheriting are on lower rate tax then the tax rate on funds drawn may be less than tax benefit that you had going in.

The variability of any individual lifespan must be factored into the overall cost of providing the state pension. Just because someone dies before 75, that doesn’t mean the state has “saved” the expense of 10 years pension payments. Those 10 years were allocated across the entire pensioner population.

najan49

bearshare said:

Cus said:

bearshare said:

Am I missing something? Surely, if you build up a large pension, with HRT relief on the way in, then you will be paying HRT on most of it 'on the eay out'. (Ignoring company contributions). I.e. no benefit to paying in, beyond the - limited - tax free lump sum. 

You can take approx £67k a year income from your pension without moving to the higher tax band. (Combination of personal allowance and 25%tax free in that).
To extract £67k a year you could argue that at a 4% withdrawal rate that's a pot of £1.675mn built up, which is likely done with hrt on the way in.

You will not get 25% tax free anymore. It is limited to £260k-ish

Yes so you can only take £66,667 UFPLS without paying higher rate tax for 16 years. But if the motivation is to avoid higher rate tax in the first place, the most you can achieve is 13 years (currently) to withdraw from a protected age pension before the state pension is payable.

ukdw

BuildTheWall said:

ukdw said:

Notepad_Phil said:

caveman8006 said:

The key question for me is what should people like me be doing? I have crystalized 100% of the existing LTA and was in the habit of taking a taxable income from the drawdown account to take my total earnings up to the higher rate limit (so as to avoid the threat of an LTA tax on any growth in the pot at 75, particularly when receipt of the State pension would have  severely constrained basic rate withdrawals between 67 and 75). Am I now safe in leaving the drawdown pot to grow as a potential IHT-free inter-generational transfer?   

Future governments can always make whatever changes they want, so I would never say anything is completely safe, but it appears to be safer now then it was pre-budget.

Rather than tinkering with the LTA - I suppose future governments might instead tinker with the £268k max figure.  
Or potentially re-introduce the LTA again.

So might be worth considering fully crystallising before the next government change, and therefore also fully using the £268k PCLS limit.

LTA won’t be re-introduced. It’s just too complex to administer and comes with a lot of historical baggage. 

More Likely is pensions brought under IHT. 

According to the headline of the Radio 4 today programme this morning - 'Labour have pledged to reintroduce the LTA should they get elected' - and instead plan to implement a bespoke system for the NHS.