LTA: remove charge from April 2023 and abolish from April 2024

marlot

EdSwippet said:

Pat38493 said:

I try not to read the Express or the Mail in case I get brainwashed in some way....  that said, the few articles I have accidently read, they usually tell the truth....in the last paragraph and the opposite of the implication in the headline... 

See also: Gell-Mann amnesia effect.

Oh yes!  I was involved in the roll out of a Government project.  The newspapers didn't have a clue.

I've seen some shocking pensions reporting in The Times, The Telegraph and The Guardian - not looked anywhere else.

Newpapers don't report the news any more.  If they ever did.  They have a fixed position and write stories which confirm their readers' biases.

zagfles

marlot said:

EdSwippet said:

Pat38493 said:

I try not to read the Express or the Mail in case I get brainwashed in some way....  that said, the few articles I have accidently read, they usually tell the truth....in the last paragraph and the opposite of the implication in the headline... 

See also: Gell-Mann amnesia effect.

Oh yes!  I was involved in the roll out of a Government project.  The newspapers didn't have a clue.

I've seen some shocking pensions reporting in The Times, The Telegraph and The Guardian - not looked anywhere else.

Very true. Which is why it's wise to read multiple media sources, rather than living under the illusion any one is accurate, unbiased, and lacking errors. And that most definitely includes the BBC.

Newpapers don't report the news any more.  If they ever did.  They have a fixed position and write stories which confirm their readers' biases.

In general true, although there are various angles and degrees to anything. If you read some of the comments on articles you'll see a wide variety of views within the readership. Also how generally clueless the readership are, even of the "broadsheets" it's down several degrees of magnitude on any discussion on MSE

MK62

zagfles said:

MK62 said:

zagfles said:

MK62 said:

zagfles said:

Albermarle said:

MK62 said:

If Labour profoundly disagree with this policy shift, and it appears that they do, then it's not all that surprising that they will oppose it.....at least they are being straight and up front about that........if they win the next election the LTA will be back.
While the dust is still settling on this bombshell, so details probably aren't fully worked out atm, it would be rather helpful in the coming weeks if they fleshed out exactly what they mean, and if their plans will, should they win the next election, include any measures to retrospectively tax anyone who takes advantage of the LTA's charge removal/abolition in the meantime.
I guess it's a case of wait and see......again.....
My own view is that I think it would be unlikely they'd retrospectively tax anyone, and even if they did, that they'd put anyone who takes advantage of the LTA removal in a worse position than today..........but who knows for sure?

If I was a betting man, then I would say if Labour get in they will not actually in the end reverse the LTA abolition, as it would be too complicated. Plus negative effect on Doctors etc
However including pension pots in IHT calculations ( or partly include over a certain amount for example ) could well be on the agenda.
Even the normally very pro Tory/anti LTA   Daily Express is expressing some reservations. Quote

Labour loves accusing Tory chancellors of helping out their rich mates, so at first I scoffed Shadow Chancellor Rachel Reeves line of attack But the more I look at Hunt's move, the more I see her point. Hunt has just given super-wealthy Britons a massive opportunity to fight back against his own inheritance tax squeeze, by allowing them to pump a small fortune into pensions.

The backlash against Hunt's move will hit all of us. If pensions are seen as a massive IHT tax dodge for the rich, it could tempt Reeves to do more than restore the lifetime allowance.

She could make everybody's pensions subject to IHT.

Plenty of people want to see this happen. Last December, the Institute for Fiscal Studies published a paper arguing that the overly generous tax treatment of pension pots at death needs to be swiftly ended.

Thanks to Hunt, that day has just moved closer.

Families have been handed a tax planning nuclear weapon today, and will be clamouring to use it.Unfortunately, Labour has been handed an opportunity to go nuclear on our pensions, too.

If she does, we'll know who to blame. Jeremy Hunt.

I bet he didn't expect that

I suppose now they're falling they need something else to talk about. Perhaps they need reminding the "super-wealthy" eg those on £360k+ (like company directors, pro footballers and some BBC pundits) can't "pump in" more than £10k a year into their pensions because of the AA taper. But I think that's a bit advanced for the Express.

That's not exactly the case though - the AA taper might restrict the amount of pension contributions those on £360k+pa can get tax relief on to £10k pa, but it doesn't actually restrict the amount they can put into a pension.......that's the crux of this potential "IHT loophole" it appears the chancellor might have created.....

Yeah, they could pay a 45% AA charge in order to save 40% IHT Brilliant tax planning!

They are going to be paying 45% tax on those earnings either way.........if they don't put it in a pension, they'll pay 45% income tax, and then potentially a further 40% in IHT......putting it in the pension will, as it stands, avoid the IHT.

No, it's very unlikely to be a sensible tax dodge.

If they exceeded the AA, paid the 45% tax charge, and then finded they needed the money in their lifetime, they'd end up paying income tax on top. And for the "super-wealthy", probably at 45% or at least 40%. So they'd be taxed twice on the same money probably at 45% both times.

Therefore - it would only make sense for someone who is sure they won't need the money in their lifetime.

If that's the case, then why not give the money away now, and avoid IHT completely if they survive 7 years, and partially if they survive at least 3. Also if they gift out of income, there is no IHT anyway however long they survive. And if they don't want the beneficiary to have it yet (eg a child) they could use some kind of trust.

In the case of terminal illness or even poor health, HMRC can investigate substantial pension contributions within a couple of years of death and can rule them liable for IHT.

So, why would anyone want to pay the 45% AA charge, and then leave their beneficiaries liable for income tax on drawdown (unless they die under 75), when they could just pay the 45% tax and give them the money with no additional taxes?

Well if estate planning and IHT avoidance was as simple as "just give them the money now with no additional taxes" then it'd all be very simple......😁

On the point about double taxation, if you felt there was a reasonable chance you'd need the money, then you probably wouldn't put it into a pension without tax relief.......so yes, you'd likely only consider this route if you were reasonably sure you wouldn't need the money......so the case of this double taxation should never arise. However, if unforeseen circumstances meant you did need the money at some point, then it's true that you'd have paid 45% tax on the contributions going into the pension, and you'll then also have to pay at your marginal rate on withdrawal.......not great, but your alternative of giving the money away now would mean you'd have.......nothing......perhaps a bit less great. That's the thing about planning for the future.......you're never 100% sure about much at all.

Pat38493

MK62 said:

zagfles said:

MK62 said:

zagfles said:

MK62 said:

zagfles said:

Albermarle said:

MK62 said:

If Labour profoundly disagree with this policy shift, and it appears that they do, then it's not all that surprising that they will oppose it.....at least they are being straight and up front about that........if they win the next election the LTA will be back.
While the dust is still settling on this bombshell, so details probably aren't fully worked out atm, it would be rather helpful in the coming weeks if they fleshed out exactly what they mean, and if their plans will, should they win the next election, include any measures to retrospectively tax anyone who takes advantage of the LTA's charge removal/abolition in the meantime.
I guess it's a case of wait and see......again.....
My own view is that I think it would be unlikely they'd retrospectively tax anyone, and even if they did, that they'd put anyone who takes advantage of the LTA removal in a worse position than today..........but who knows for sure?

If I was a betting man, then I would say if Labour get in they will not actually in the end reverse the LTA abolition, as it would be too complicated. Plus negative effect on Doctors etc
However including pension pots in IHT calculations ( or partly include over a certain amount for example ) could well be on the agenda.
Even the normally very pro Tory/anti LTA   Daily Express is expressing some reservations. Quote

Labour loves accusing Tory chancellors of helping out their rich mates, so at first I scoffed Shadow Chancellor Rachel Reeves line of attack But the more I look at Hunt's move, the more I see her point. Hunt has just given super-wealthy Britons a massive opportunity to fight back against his own inheritance tax squeeze, by allowing them to pump a small fortune into pensions.

The backlash against Hunt's move will hit all of us. If pensions are seen as a massive IHT tax dodge for the rich, it could tempt Reeves to do more than restore the lifetime allowance.

She could make everybody's pensions subject to IHT.

Plenty of people want to see this happen. Last December, the Institute for Fiscal Studies published a paper arguing that the overly generous tax treatment of pension pots at death needs to be swiftly ended.

Thanks to Hunt, that day has just moved closer.

Families have been handed a tax planning nuclear weapon today, and will be clamouring to use it.Unfortunately, Labour has been handed an opportunity to go nuclear on our pensions, too.

If she does, we'll know who to blame. Jeremy Hunt.

I bet he didn't expect that

I suppose now they're falling they need something else to talk about. Perhaps they need reminding the "super-wealthy" eg those on £360k+ (like company directors, pro footballers and some BBC pundits) can't "pump in" more than £10k a year into their pensions because of the AA taper. But I think that's a bit advanced for the Express.

That's not exactly the case though - the AA taper might restrict the amount of pension contributions those on £360k+pa can get tax relief on to £10k pa, but it doesn't actually restrict the amount they can put into a pension.......that's the crux of this potential "IHT loophole" it appears the chancellor might have created.....

Yeah, they could pay a 45% AA charge in order to save 40% IHT Brilliant tax planning!

They are going to be paying 45% tax on those earnings either way.........if they don't put it in a pension, they'll pay 45% income tax, and then potentially a further 40% in IHT......putting it in the pension will, as it stands, avoid the IHT.

No, it's very unlikely to be a sensible tax dodge.

If they exceeded the AA, paid the 45% tax charge, and then finded they needed the money in their lifetime, they'd end up paying income tax on top. And for the "super-wealthy", probably at 45% or at least 40%. So they'd be taxed twice on the same money probably at 45% both times.

Therefore - it would only make sense for someone who is sure they won't need the money in their lifetime.

If that's the case, then why not give the money away now, and avoid IHT completely if they survive 7 years, and partially if they survive at least 3. Also if they gift out of income, there is no IHT anyway however long they survive. And if they don't want the beneficiary to have it yet (eg a child) they could use some kind of trust.

In the case of terminal illness or even poor health, HMRC can investigate substantial pension contributions within a couple of years of death and can rule them liable for IHT.

So, why would anyone want to pay the 45% AA charge, and then leave their beneficiaries liable for income tax on drawdown (unless they die under 75), when they could just pay the 45% tax and give them the money with no additional taxes?

Well if estate planning and IHT avoidance was as simple as "just give them the money now with no additional taxes" then it'd all be very simple......😁

On the point about double taxation, if you felt there was a reasonable chance you'd need the money, then you probably wouldn't put it into a pension without tax relief.......so yes, you'd likely only consider this route if you were reasonably sure you wouldn't need the money......so the case of this double taxation should never arise. However, if unforeseen circumstances meant you did need the money at some point, then it's true that you'd have paid 45% tax on the contributions going into the pension, and you'll then also have to pay at your marginal rate on withdrawal.......not great, but your alternative of giving the money away now would mean you'd have.......nothing......perhaps a bit less great. That's the thing about planning for the future.......you're never 100% sure about much at all.

By the way how is this actually enforced?  Does HMRC have the right to download everybody's bank records for the last 7 years after they die?

Malthusian

 Does HMRC have the right to download everybody's bank records for the last 7 years after they die?

If tax evasion was as simple as "Hi, we think your parent gave you some money you didn't declare on the IHT forms, can we look at your and their bank accounts?" "No." "Damn, foiled again!" we'd be living in an anarcho-capitalist dystopia. 

HMRC can look at whatever bank records they like if they think evasion has taken place. Banks share information automatically with HMRC.

Pat38493

Malthusian said:

 Does HMRC have the right to download everybody's bank records for the last 7 years after they die?

If tax evasion was as simple as "Hi, we think your parent gave you some money you didn't declare on the IHT forms, can we look at your and their bank accounts?" "No." "Damn, foiled again!" we'd be living in an anarcho-capitalist dystopia. 

HMRC can look at whatever bank records they like if they think evasion has taken place. Banks share information automatically with HMRC.

Of course but I was more asking whether they do this as a matter of routine for all deaths, or whether they have to have some kind of suspicion or information to act upon - I would hope they they don't just go poking around everybody's bank records who has a relative who died recently without any kind of reason to do so.

zagfles

MK62 said:

zagfles said:

MK62 said:

zagfles said:

MK62 said:

zagfles said:

Albermarle said:

MK62 said:

If Labour profoundly disagree with this policy shift, and it appears that they do, then it's not all that surprising that they will oppose it.....at least they are being straight and up front about that........if they win the next election the LTA will be back.
While the dust is still settling on this bombshell, so details probably aren't fully worked out atm, it would be rather helpful in the coming weeks if they fleshed out exactly what they mean, and if their plans will, should they win the next election, include any measures to retrospectively tax anyone who takes advantage of the LTA's charge removal/abolition in the meantime.
I guess it's a case of wait and see......again.....
My own view is that I think it would be unlikely they'd retrospectively tax anyone, and even if they did, that they'd put anyone who takes advantage of the LTA removal in a worse position than today..........but who knows for sure?

If I was a betting man, then I would say if Labour get in they will not actually in the end reverse the LTA abolition, as it would be too complicated. Plus negative effect on Doctors etc
However including pension pots in IHT calculations ( or partly include over a certain amount for example ) could well be on the agenda.
Even the normally very pro Tory/anti LTA   Daily Express is expressing some reservations. Quote

Labour loves accusing Tory chancellors of helping out their rich mates, so at first I scoffed Shadow Chancellor Rachel Reeves line of attack But the more I look at Hunt's move, the more I see her point. Hunt has just given super-wealthy Britons a massive opportunity to fight back against his own inheritance tax squeeze, by allowing them to pump a small fortune into pensions.

The backlash against Hunt's move will hit all of us. If pensions are seen as a massive IHT tax dodge for the rich, it could tempt Reeves to do more than restore the lifetime allowance.

She could make everybody's pensions subject to IHT.

Plenty of people want to see this happen. Last December, the Institute for Fiscal Studies published a paper arguing that the overly generous tax treatment of pension pots at death needs to be swiftly ended.

Thanks to Hunt, that day has just moved closer.

Families have been handed a tax planning nuclear weapon today, and will be clamouring to use it.Unfortunately, Labour has been handed an opportunity to go nuclear on our pensions, too.

If she does, we'll know who to blame. Jeremy Hunt.

I bet he didn't expect that

I suppose now they're falling they need something else to talk about. Perhaps they need reminding the "super-wealthy" eg those on £360k+ (like company directors, pro footballers and some BBC pundits) can't "pump in" more than £10k a year into their pensions because of the AA taper. But I think that's a bit advanced for the Express.

That's not exactly the case though - the AA taper might restrict the amount of pension contributions those on £360k+pa can get tax relief on to £10k pa, but it doesn't actually restrict the amount they can put into a pension.......that's the crux of this potential "IHT loophole" it appears the chancellor might have created.....

Yeah, they could pay a 45% AA charge in order to save 40% IHT Brilliant tax planning!

They are going to be paying 45% tax on those earnings either way.........if they don't put it in a pension, they'll pay 45% income tax, and then potentially a further 40% in IHT......putting it in the pension will, as it stands, avoid the IHT.

No, it's very unlikely to be a sensible tax dodge.

If they exceeded the AA, paid the 45% tax charge, and then finded they needed the money in their lifetime, they'd end up paying income tax on top. And for the "super-wealthy", probably at 45% or at least 40%. So they'd be taxed twice on the same money probably at 45% both times.

Therefore - it would only make sense for someone who is sure they won't need the money in their lifetime.

If that's the case, then why not give the money away now, and avoid IHT completely if they survive 7 years, and partially if they survive at least 3. Also if they gift out of income, there is no IHT anyway however long they survive. And if they don't want the beneficiary to have it yet (eg a child) they could use some kind of trust.

In the case of terminal illness or even poor health, HMRC can investigate substantial pension contributions within a couple of years of death and can rule them liable for IHT.

So, why would anyone want to pay the 45% AA charge, and then leave their beneficiaries liable for income tax on drawdown (unless they die under 75), when they could just pay the 45% tax and give them the money with no additional taxes?

Well if estate planning and IHT avoidance was as simple as "just give them the money now with no additional taxes" then it'd all be very simple......😁

It is. If you don't need the money and can survive 7 years

On the point about double taxation, if you felt there was a reasonable chance you'd need the money, then you probably wouldn't put it into a pension without tax relief.......so yes, you'd likely only consider this route if you were reasonably sure you wouldn't need the money......so the case of this double taxation should never arise. However, if unforeseen circumstances meant you did need the money at some point, then it's true that you'd have paid 45% tax on the contributions going into the pension, and you'll then also have to pay at your marginal rate on withdrawal.......not great, but your alternative of giving the money away now would mean you'd have.......nothing......perhaps a bit less great. That's the thing about planning for the future.......you're never 100% sure about much at all.

Or just give it to a beneficiary who you trust and who won't spend it all, and agree if you did need some they give it back Obviously it couldn't be formailised as that would be a gift with reservation, but maybe have a card to play if they don't, cut them out of your actual will, or take a home reversion loan out.

Likely to be a far better option than double taxation. There's probably other more advanced things the "super-wealthy" could do to avoid IHT. I doubt they'll be taking the Express's advice.

RogerPensionGuy

Looks confirmed these changes are confirmed now thankfully. 
.
https://votes.parliament.uk/Votes/Commons/Division/1501

Sterlingtimes

RogerPensionGuy said:

Looks confirmed these changes are confirmed now thankfully. 
.
https://votes.parliament.uk/Votes/Commons/Division/1501

Thank you. This is encouraging. Let us hope that the opponents do not undermine confidence in the approach.

retiringtoosoon

And looks like it will be reintroduced soon after....

https://www.bbc.co.uk/news/uk-politics-65052706