Private pension pot

If Reeves removes the under 75 tax free pension pot would it be easy enough to just leave it to your husband/wife and ensure it then becomes tax free?  I have a sad reason re asking. 

I know that the Budget is next week but at present tax free pensions under 75 are much more flexible.  

Do the experts here think it will be possible to bring pensions into husband/wife pot? Or will it be horribly complex.
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Comments

  • Emmia
    Emmia Posts: 5,108 Forumite
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    You have to wait for the budget to find out what will transpire.

    Everything else is speculation.
  • dunstonh
    dunstonh Posts: 119,210 Forumite
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    Do the experts here think it will be possible to bring pensions into husband/wife pot? Or will it be horribly complex.
    It would be complex and would go against what Labour are trying to achieve with this budget.  It would help those with more wealth and not help those with lower wealth.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Marcon
    Marcon Posts: 13,780 Forumite
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    What 'the experts' here think isn't going to have any impact whatsoever on what the Budget actually says. Speculation, for whatever reason, is quite simply pointless - however sad the reason.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Aretnap
    Aretnap Posts: 5,669 Forumite
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    edited 28 October 2024 at 7:34AM
    Bolt1234 said:
    If Reeves removes the under 75 tax free pension pot would it be easy enough to just leave it to your husband/wife and ensure it then becomes tax free? 
    By far the simplest change that could be made to the taxation of inherited pensions would be to make the rules if you die before 75 the same as if you die after 75, ie the beneficiary pays income tax on withdrawals. In which case there would probably be no exception if you left it to a spouse - there isn't at the moment. 

    TBF the current situation if you die before 75 is an insanely generous tax break which allows people to accumulate and pass on practically unlimited (post lifetime allowance abolition) amounts of money without it ever being subject to tax, on the way in or the way out. It does feel ripe for reform.

    But this is our guesswork - well find out what actually happens next week.
  • Bolt1234
    Bolt1234 Posts: 314 Forumite
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    I'm horrified that inheritance tax will apply to pensions. How is this meant to work within married couples?
  • If pension is inherited, 40% tax would apply above the threshold. Is that literally inherited as cash without income tax becoming due in addition to the IHT? 
    I have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".
  • dunstonh
    dunstonh Posts: 119,210 Forumite
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    edited 30 October 2024 at 2:31PM
    Bolt1234 said:
    I'm horrified that inheritance tax will apply to pensions. How is this meant to work within married couples?
    Absolutely no details yet available.  There will be in due course.  The Government has gone for the most complex option.
    However, no IHT between spouses.
    But risk of double taxation.  Income and inheritance tax.
    Reading the details is going to be key.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Bolt1234
    Bolt1234 Posts: 314 Forumite
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    Sterling - not sure what you mean?  As his wife I am inheirting his pension.  Its now within IHT calculation which shouldnt make any difference because leaving your assets to your wife/husband are free of IHT but it looks like for pension pots they will be treated differently


  • Bolt1234
    Bolt1234 Posts: 314 Forumite
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    Dun - yes I agree. She wasnt going to go into the finer details but yes - its all in the detail.  
  • Marcon
    Marcon Posts: 13,780 Forumite
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    Bolt1234 said:
    I'm horrified that inheritance tax will apply to pensions. How is this meant to work within married couples?
    The earliest this will happen is apparently 2027, so perhaps wait for the detail before having a knee jerk reaction? 
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
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