Income tax avoidance

Argonauts

I would like some assistance from the board experts there are many on here
I will be seeking advice as well

I’m currently in a conundrum about not wanting to pay income tax or inheritance tax in the future

Currently got
HL Sipp 99k in cash drawing down each month enough to be £12000 this tax year
L&G pot worth 400k untouched as yet 
Other pot 570k untouched as yet

House £240k

Banks £450 k bond ladders and isas 
Half in isas so no tax to pay

State pension 
Full one in 4 yrs , wife full one In 5 yrs 

Income tax 
I’m taking 12k from H&L this year leaves £6500 for interest from banks
No tax to pay
Wife gets Lgps pension and H&L Sipp payment just under 10k in total
Leaves 8500 for interest from banks 

No tax to pay for either of us
Any cash I need for bills  yearly ones tv licence , car insurance are taken from cash I have in Marcus account 

Taking more from Sipp before state pension 
If I take more then interest from banks would be taxed and extra money from Sipp at 20%

Same for wife 

Pensions
Plan on taking 25% TFC
Give to kids , we not need it got £260k left to take
Help kids move or pay off their mortgages 
It’s a gift so live 7 yrs should be ok ?

Currently giving gifts 3k allowed a year
Have given more and kept records of gifts!!

Gifts from income ?
Can I treat from banks / Sipp/Isas count to income ?
Keeping records of any gifts
Marriage 5k gift to one child soon as well

Inheritance tax 
Married we are 
When last parent dies 1 million and under tax free (at the momment)
2 X 325k and 2X 175k gives kids a million tax free

We are going to be over we know
Spending plenty on holidays change car in new year old one 3 yrs old 

Is it better getting cash out of Sipp first and paying 20% than kids paying 40% later on

Was always planning this tax yr to take TFC and give to kids
Thinking do this prior to budget , just in case any changes happen. 


Last problem kids taking cash they say you spend it on yourselves
We’ve enough 
Yes care home could happen in next decade who knows seen prices for my parents shocking !!

What to do ?

Not really fancy annuity

RogerPensionGuy

Looks like the OP has many angle covered. 

Just brings a few points in my head.

1. IHT is paid by a deseased persons estate, not by the deceased person or any beneficiaries, with the pension & IHT changes from April 2027 I know many many people both sides of this fence(parents/children) who are paranoid on wealth inside pensions not being diluted.

2. Maybe a PLA term policy that pays out at maturity or death, maybe a few of these could work.

All nice problems to have. 

This thread reminds me of another unfairness with IHT, why should a family that owned a house get an extra 350K IHT as it passes through that families estate, how about the good people that rent for example, I guess just another example of tax winners, loosers and all the various moving cliff edges available to be used. 

poseidon1

You seem to be revisiting your November 2024 post below -

https://forums.moneysavingexpert.com/discussion/6566107/one-way-or-another#latest

I very much doubt forum contributors can add anything more beyond suggestions in that post.

However seems to me you might benefit from a consultation with an IFA given that so much of your future IHT exposure now relates to your various SIPPs. 

Despite the general objection on MSE forums to the creation of lifetime trusts, in your specific circumstances maybe worth an intial  discussion with a IFA with a view to potentially benefiting grandchildren if your own children are content for you to bypass them with regard to lifetime gifting.

Using life company investment bonds may feature in that discussion, which maybe advantageous to both you and your wife given your desire to remain basic rate tax payers throughout retirement.

Overall your main problem is lack of  desire to spend whilst  continuing your accumulation of taxable wealth.

Argonauts

Lack of desire to spend
weve had 6 holidays already 2 more before Xmas 
change motor in new year 
holidays start again in January 

i think as money amount goes up we are not spending quick enough
thats why give kids it now 

squirrelpie

RogerPensionGuy said:

This thread reminds me of another unfairness with IHT, why should a family that owned a house get an extra 350K IHT as it passes through that families estate

Why should I, who have avoided contributing to overpopulation & carbon emissions etc have to pay tax that others don't?

Keep_pedalling

Your house is only worth £240k which means on the second death you can’t take advantage of two full RNRBs just £240 of it.

Argonauts

I presumed when second parent died
estate has a million 
2x325
2x175
last patent gets them from first parent death 

is this incorrect ?
is it not a million 


can you show me the 24k please

GrumpyDil

The additional element of 175k each relates to passing property down to family.  The maximum amount is 350k but that is limited by the value of the house involved, in your case that's 245k at the moment.

Keep_pedalling

Argonauts said:

I presumed when second parent died
estate has a million 
2x325
2x175
last patent gets them from first parent death 

is this incorrect ?
is it not a million 


can you show me the 24k please

Sorry the £24 k was a typo I have now corrected that to £240k. The RNRB can only be claimed against your home (or under the downsizing rules a home your previously owned)’ so if your home is worth less thanks than £350k the most that can be claimed is the value of the home.

Argonauts

Can you explain how much the estate will have when second parent dies is it a million as previous thought or 650 k 2x325 only

i have seen on many websites it’s one million
can somebody state the actual figure and how it is achieved

Grumpy_chap

Argonauts said:

I would like some assistance from the board experts there are many on here
I will be seeking advice as well

I’m currently in a conundrum about not wanting to pay income tax or inheritance tax in the future

Easily solved.

Gift everything to charity.
Either now or in your Will.