Results of Government consultation re IHT on pension pots today

Sea_Shell

Probate solicitors....rub hands 🤑

More work = more fees

leosayer

Albermarle said:

HappyHarry said:

This is going to get very messy. Going by the current number of posters on here with IHT queries, and assuming that these posters are more clued up than the general population, your average Personal Representative is going to struggle massively with the potential new responsibilities. 

Although the large majority of estates will still not be liable for IHT at all.
However you are right for those that are it will make life more complicated, if an unused pension pot is involved
I think I read in the link that 75% of estates with IHT liability already use appointed  agents to handle IHT,  rather than a lay executor handling it themselves. Maybe if there is a pension pot involved that % will go up. 

Even where IHT isn't due, surely the executor needs to tell the pension administrators so that they don't pay 40% to HMRC as I outlined in my previous post.

2stixoftwixes

Although the large majority of estates will still not be liable for IHT at all.
However you are right for those that are it will make life more complicated, if an unused pension pot is involved
I think I read in the link that 75% of estates with IHT liability already use appointed  agents to handle IHT,  rather than a lay executor handling it themselves. Maybe if there is a pension pot involved that % will go up. 

How often I hear this

So many couples aren't married or in civil partnerships £325,000 band is very small now that they have added pensions into the equation

PootleF

2stixoftwixes said:

Although the large majority of estates will still not be liable for IHT at all.
However you are right for those that are it will make life more complicated, if an unused pension pot is involved
I think I read in the link that 75% of estates with IHT liability already use appointed  agents to handle IHT,  rather than a lay executor handling it themselves. Maybe if there is a pension pot involved that % will go up. 

How often I hear this

So many couples aren't married or in civil partnerships £325,000 band is very small now that they have added pensions into the equation

I suspect that there will be a bit of a rush on weddings and civil partnerships before April 2027

Emmia

2stixoftwixes said:

Although the large majority of estates will still not be liable for IHT at all.
However you are right for those that are it will make life more complicated, if an unused pension pot is involved
I think I read in the link that 75% of estates with IHT liability already use appointed  agents to handle IHT,  rather than a lay executor handling it themselves. Maybe if there is a pension pot involved that % will go up. 

How often I hear this

So many couples aren't married or in civil partnerships £325,000 band is very small now that they have added pensions into the equation

The rationale to formalise things between couples becomes even stronger.

2stixoftwixes

I think this will backfire in many ways
Pensions will be withdrawn and spent, leaving many without adequate funds to see them through retirement

af1963

Pensions being "withdrawn and spent" is what they are for, and the reason they received such generous tax treatment for contributions.  There's no coherent reason why pension assets should be treated any differently to other assets for IHT.  

Anyone in IHT territory ( £1m plus for the survivor of a couple) won't be in imminent danger of being "without adequate funds".

dunstonh

Lots of widows and widowers remarrying.   The new definition of attractive to partner is an unused deceased spouse's IHT allowance.

artyboy

Sea_Shell said:

Just posted on the original thread on this subject (following the budget) before I saw this new thread.

More heaped on the shoulders of executors.

Exactly this, no layperson is going to want to be the executor of a larger estate.

Totally unsurprised by this cop out of an approach...

Albermarle

2stixoftwixes said:

I think this will backfire in many ways
Pensions will be withdrawn and spent, leaving many without adequate funds to see them through retirement

The whole idea of why pensions are supported with tax relief, is to support people to have a more comfortable retirement ( and less likely to claim benefits).
So if this legislation encourages more spending and less hoarding, then that is more in the spirit of what pensions are for.
Plus the spending will hopefully help the economy, and bring in a bit more tax for the Treasury today rather than in the future. 
IHT on pensions will hurt some better off people ( including me) but the logic is quite sound and for sure I am already spending more than I did.