To SIPP, or not to SIPP ....?

valiant24

I'm 64 and retired.  My wife is 63 and still works for the family business.

Each year I contribute the maximum for a non-earner (£2,880) to my SIPP; and the business contributes around £6,336 to my wife's, matching her salary.

The rationale is that all the unused funds would go to our kids free of IHT.

After the recent budget, the plan is that this will no longer the case after April 2027.   So I am pondering whether it's worth doing this year.

I don't know how to do the sums.  Does anyone else know?

Thanks
V

Albermarle

Will you be actually liable for IHT, will your estate be big enough?

apt

You will still have the advantage of being able to take 25% as a tax-free lump sum More will be tax-free if your or your wife's annual income is below the personal allowance.

valiant24

Albermarle said:

Will you be actually liable for IHT, will your estate be big enough?

Yes I think so.  Home-owner in the South-East!

valiant24

apt said:

You will still have the advantage of being able to take 25% as a tax-free lump sum More will be tax-free if your or your wife's annual income is below the personal allowance.

In the case of my wife, this is a good point, thanks.
In my case the current value of my SIPP is already larger than 4 x the lump sum limit, so adding more to the SIPP won't increase the amount I can take tax-free (disastrous investments not withstanding!).

kempiejon

valiant24 said:
The rationale is that all the unused funds would go to our kids free of IHT.

After the recent budget, the plan is that this will no longer the case after April 2027.   So I am pondering whether it's worth doing this year.

The change in tax on pensions as part of the estate needn't scupper your plan, If the objective is to give the kids money and not have your estate have an inheritance tax liability how about you keep your assets below the allowance by giving the money to the kids while you're alive and can see them benefit? Or spending it on indulging yourself, others and philanthropy?

valiant24

kempiejon said:

valiant24 said:
The rationale is that all the unused funds would go to our kids free of IHT.

After the recent budget, the plan is that this will no longer the case after April 2027.   So I am pondering whether it's worth doing this year.

... how about you keep your assets below the allowance by giving the money to the kids while you're alive and can see them benefit? 

Because they're feckless millenials!! ;-)
Seriously, we have started some of that this week, with Deeds of Gift, so great suggestion.

What would be ideal would be to know the date on which I am going to die!  I asked CoPilot who, after a raft of questions and some reluctance, gave me 17/03/2043.   Computers are never wrong, are they?

kempiejon

valiant24 said:

Because they're feckless millenials!! ;-)

Seriously, we have started some of that this week, with Deeds of Gift, so great suggestion.

What would be ideal would be to know the date on which I am going to die!  I asked CoPilot who, after a raft of questions and some reluctance, gave me 17/03/2043.   Computers are never wrong, are they?

Ah, the feckless millennials you've nurtured, trained, conditioned and guided to be such. I'd blame the grandparents.
You can of course bring forward the date you die yourself if the certainty would be useful. Born around 1960?
When my mother was ill, her mother not long died, mum and dad, my brother and I had a chat and my dad gave us both a cheque as an early inheritance, we were grown up and financially settled.

singhini

Worth remembering 
1)   We don't yet have the finalised legislation, so things could change.
2)   You might fall seriously ill / terminally ill and be able to cash in your pensions tax free under special rules for end of life (remember 1 in 2 people get cancer)

Sorry to sound so negative but its a reality. 

If i was in your position i would keep putting into the SIPP and concentrate on reducing my other assets so I'm not liable to IH

IanManc

singhini said:

Worth remembering 
1)   We don't yet have the finalised legislation, so things could change.
2)   You might fall seriously ill / terminally ill and be able to cash in your pensions tax free under special rules for end of life (remember 1 in 2 people get cancer)

Sorry to sound so negative but its a reality. 

If i was in your position i would keep putting into the SIPP and concentrate on reducing my other assets so I'm not liable to IH

In the UK roughly a quarter of all deaths are from cancer, and half of those are deaths of people over 75. 

In the long term we all die, but saying that pensions can be cashed in under the rules for end of life and following that with "remember 1 in 2 people get cancer" is an unhelpful non-sequitur.

singhini

IanManc said:

singhini said:

Worth remembering 
1)   We don't yet have the finalised legislation, so things could change.
2)   You might fall seriously ill / terminally ill and be able to cash in your pensions tax free under special rules for end of life (remember 1 in 2 people get cancer)

Sorry to sound so negative but its a reality. 

If i was in your position i would keep putting into the SIPP and concentrate on reducing my other assets so I'm not liable to IH

In the UK roughly a quarter of all deaths are from cancer, and half of those are deaths of people over 75. 

In the long term we all die, but saying that pensions can be cashed in under the rules for end of life and following that with "remember 1 in 2 people get cancer" is an unhelpful non-sequitur.

Neither Enoch or Elijah died