Apparently IHT on may not be too bad?

RogerPensionGuy

I was just reading the link enclosed below, it says SIPP IHT changes may not be such an issue.

I think for estate IHT planning it is indeed a big issue for estates that go in the IHT zone and with fiscal drag, government revenue needs and inflation especially housing, this net will just grow at a fast rate.

I was surprised to read it saying a couple in retirement need 59K net income not including some spending items to have a nice retirement, I know many many couples or singles(adjusted) that will be far short of these numbers.

That 59K figure is certainly sobering and it sure backs up the information outputs that many people are not saving enough for retirement.

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https://www.thisismoney.co.uk/money/pensions/article-14263403/Fears-inheritance-tax-raid-pension-overcooked-BILLY-BURROWS.html

p00hsticks

RogerPensionGuy said:

I was surprised to read it saying a couple in retirement need 59K net income not including some spending items to have a nice retirement, I know many many couples or singles(adjusted) that will be far short of these numbers.

I think the amount needed in retirement is really driven by the persons standard of living prior to retirement. 

I'm sure there are many couples who are currently getting by in their working lives on less net income than 59k, even when facing the additional costs of raising kids, paying a mortgage etc that probably won't be around by the time they reach retirement age. That figure of £59k is well above the average household income in the UK.

Pat38493

The £59K figures is coming from PLSA and is a bit controversial.  Also some have claimed that it is based on a very small sample size but I have not looked in detail.  For sure, you should do your own analysis about what your spending requirements would be.  

incus432

While I see some of the Telegraph-type reaction as completely OTT, the inclusion of pensions in IHT is a serious issue.

For starters I take issue with this statement from Billy Burrows (afraid I'd never heard of him)   "The new rules should only affect those with very large pensions"

No. They also affect those with property whose pensions and other assets put them over the 1 million mark. And this is many more than those with big pensions.  Even if you don't end up being in the IHT bracket you now have to plan to ensure your children dont end uop with that hassle.

IHT used to only affect the very wealthy and they had financial advisors and schemes to work around it. They still will. But it's now going to affect the middle classes who dont have those resources.

And yes I think those PLSA figures for comfortable living income are absurdly high

BikingBud

p00hsticks said:

RogerPensionGuy said:

I was surprised to read it saying a couple in retirement need 59K net income not including some spending items to have a nice retirement, I know many many couples or singles(adjusted) that will be far short of these numbers.

I think the amount needed in retirement is really driven by the persons standard of living prior to retirement. 

I'm sure there are many couples who are currently getting by in their working lives on less net income than 59k, even when facing the additional costs of raising kids, paying a mortgage etc that probably won't be around by the time they reach retirement age. That figure of £59k is well above the average household income in the UK.

I think there are many many families trying to get by on less than £59k gross!

median household disposable income in the UK was £34,500, a decrease of 2.5% from FYE 2022, based on estimates from the Office for National Statistics (ONS) Household Finances Survey (HFS)

Average household income, UK: financial year ending 2023

But if you sell the aspiration and people buy the dream then the people remain subservient in trying to achieve that goal. Tell them they need more to retire and they work for longer and pay tax for longer!

Some of us are yet to realise how lucky we might be. But the perspective of "working" is very likely to rear its head again.

RogerPensionGuy

Reference that 59K net figure, just put that on a younger couple with say no children and paying 2K PM or 24K PA mortgage.

That looks like 83K net is required. 

Fagg packet is showing me household gross income of 120K PA. 

A very strange article in many ways. 

Marcon

incus432 said:

While I see some of the Telegraph-type reaction as completely OTT, the inclusion of pensions in IHT is a serious issue.

For starters I take issue with this statement from Billy Burrows (afraid I'd never heard of him)   "The new rules should only affect those with very large pensions"

No. They also affect those with property whose pensions and other assets put them over the 1 million mark. And this is many more than those with big pensions.  Even if you don't end up being in the IHT bracket you now have to plan to ensure your children dont end uop with that hassle.

IHT used to only affect the very wealthy and they had financial advisors and schemes to work around it. They still will. But it's now going to affect the middle classes who dont have those resources.

And yes I think those PLSA figures for comfortable living income are absurdly high

...particularly as they are post-tax figures and don't include any allowance for mortgage or rental costs, which plenty of people will have well into their later years (and if renting, indefinitely). The absurdity becomes even more obvious when you realise the figures are in many cases considerably higher than people are earning prior to retirement, so even allowing for state pension income, they are quite simply unachievable.

incus432

They say never go below the line but some of the comments on that article are wild. Incredibly hostile to annuities  ("legalised theft salesman"). I suspect they havent looked at the numbers lately.

RogerPensionGuy

This story sure reminds me of what I have seen these last 40odd years. 

40odd years ago a couple could buy a house, maybe have two children, maybe one person worked full time of say 40H PW and the other person may of worked part time maybe, good old pensions and homemaker maybe got NI credits and maybe a state pension at 60, other at 65 and no mortgage at maybe age 50 or 55.

Nowadays, a couple both out working possibly long long hours, hign rent or mortgage payments a massive % of net income, poor or no pensions on the cooker, uni debts, government help to buy debts, children and costs are another big ball-park to just guess. 

Thinking I was lucky being a baby boomer, I really feel the generations following me will have different outcomes.

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Just seen the link below propping up housing costs and helping people get in to debts, feels like the government help to buy scheme or call it push up housing costs and increase debts, it's a never ending story.

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https://www.mirror.co.uk/money/tsb-launches-new-deal-gives-34455433?utm_source=whatsapp&utm_medium=social&utm_campaign=channel

BikingBud

RogerPensionGuy said:

This story sure reminds me of what I have seen these last 40odd years. 

40odd years ago a couple could buy a house, maybe have two children, maybe one person worked full time of say 40H PW and the other person may of worked part time maybe, good old pensions and homemaker maybe got NI credits and maybe a state pension at 60, other at 65 and no mortgage at maybe age 50 or 55.

Nowadays, a couple both out working possibly long long hours, hign rent or mortgage payments a massive % of net income, poor or no pensions on the cooker, uni debts, government help to buy debts, children and costs are another big ball-park to just guess. 

Thinking I was lucky being a baby boomer, I really feel the generations following me will have different outcomes. 

Yep!

We work more to pay more for an asset that is necessary for life. As we work more we pay more tax and as it costs more we need to pay it off for longer so pay more tax over a longer period.

And to top it all off when we die the cost of the asset tips over an arbitrary and artificially surpressed limit so we end up paying tax on it then as well.

Tell me again how house price inflation was good for us all!

The bit I did find quite appropriate for another thread was this:

The maths can be complex but if people don't take income from their pension at the right time and in the right way they could be 'tipping money down the drain'.

More tax wasted!

Somebody

I think the article says that £59k is not too out of reach when taking into account 2 lots of state pension totalling c£23k.