The inevitable pre-budget speculation on pensions

LHW99

aroominyork said:

Bringing the House back to order... spouse 1 dies over 75, leaving SIPP to spouse 2 who dies under 75. Do beneficiaries of the SIPP pay income tax on withdrawals? 

Spouse 2 would pay income tax on withdrawals (but not IHT). Presumably it wouldn't change back to IT-free when passed to beneficiaries. However if Spouse 2 had their own SIPP, that would pass to beneficiaries income-tax free on death before 75.

However IHT on the pensions could come into play after 2027 on second death.

aroominyork

LHW99 said:

aroominyork said:

Bringing the House back to order... spouse 1 dies over 75, leaving SIPP to spouse 2 who dies under 75. Do beneficiaries of the SIPP pay income tax on withdrawals? 

Spouse 2 would pay income tax on withdrawals (but not IHT). Presumably it wouldn't change back to IT-free when passed to beneficiaries. However if Spouse 2 had their own SIPP, that would pass to beneficiaries income-tax free on death before 75.

However IHT on the pensions could come into play after 2027 on second death.

Perhaps others can confirm/correct whether an inherited SIPP retains its IHT-free status (pre-2027) after Spouse 2's death.

SmokeysTravels

aroominyork said:

Bringing the House back to order... spouse 1 dies over 75, leaving SIPP to spouse 2 who dies under 75. Do beneficiaries of the SIPP pay income tax on withdrawals? 

No - if spouse 2 dies under 75 then this (currently) will be income tax free for their beneficiaries on withdrawal. If they keep it and die over 75 then it becomes liable for income tax again for their beneficiaries. 

In terms of being assessed for IHT (from 2027) then every time it moves to a non spouse it will be assessed. 

Cobbler_tone

kinger101 said:

I still think they'll default to the easiest option of extending fiscal drag.  

That is probably the 'fingers in the ears' viewpoint. They are quite obviously going to have to generate/save funds from somewhere....possibly not pensions, for now. 
Gambling tax seems to be in the news today.

Really tricky time for them as they need to make some tangible changes, without decreasing their popularity further. Whilst the (new) other lot have 20 odd pages of crowd pleasing pledges (not pleasing for all of course) on the horizon. The issue is that too many people are not wise enough to read between the lines and there seems to be a constant thirst for instant gratification, so those out of power hold the next deck of cards....and repeat. 

Albermarle

Cobbler_tone said:

kinger101 said:

I still think they'll default to the easiest option of extending fiscal drag.  

That is probably the 'fingers in the ears' viewpoint. They are quite obviously going to have to generate/save funds from somewhere....possibly not pensions, for now. 
Gambling tax seems to be in the news today.

Really tricky time for them as they need to make some tangible changes, without decreasing their popularity further. Whilst the (new) other lot have 20 odd pages of crowd pleasing pledges (not pleasing for all of course) on the horizon. The issue is that too many people are not wise enough to read between the lines and there seems to be a constant thirst for instant gratification, so those out of power hold the next deck of cards....and repeat. 

Even this is controversial.
The general public, who mostly do not gamble, would I guess support extra tax on gambling profits.
However there is a big difference between on line gambling on slots, bingo etc and betting on sports where real people are involved. Especially for horse racing, which is reliant on betting levies, to support an industry employing up to 100,000 people.
Tax is never a simple issue, like pensions !

snowlaser

HedgehogRulez said:

If the 25% TFLS was reduced id be rioting on the streets. It's a key element of my retirement strategy to utilise. Already narked by it being limited to £268k in recent years.

Ladders being pulled up by the oldies again! They've benefited from it, so why cant their children?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I don't think the Great British public would be behind you there.

When you say "they've benefitted from it" the "they" certainly isn't everyone over 65 because not many people will have had the absolute maximum lump sum, and many will have had no occupational pension at all nor lump sum, just their State Pension.

Cobbler_tone

snowlaser said:

HedgehogRulez said:

If the 25% TFLS was reduced id be rioting on the streets. It's a key element of my retirement strategy to utilise. Already narked by it being limited to £268k in recent years.

Ladders being pulled up by the oldies again! They've benefited from it, so why cant their children?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I'd reframe it as 'a tiny percentage of the country would have a mild grumble' and carry on.

westv

Albermarle said:

Cobbler_tone said:

kinger101 said:

I still think they'll default to the easiest option of extending fiscal drag.  

That is probably the 'fingers in the ears' viewpoint. They are quite obviously going to have to generate/save funds from somewhere....possibly not pensions, for now. 
Gambling tax seems to be in the news today.

Really tricky time for them as they need to make some tangible changes, without decreasing their popularity further. Whilst the (new) other lot have 20 odd pages of crowd pleasing pledges (not pleasing for all of course) on the horizon. The issue is that too many people are not wise enough to read between the lines and there seems to be a constant thirst for instant gratification, so those out of power hold the next deck of cards....and repeat. 

Even this is controversial.
The general public, who mostly do not gamble, would I guess support extra tax on gambling profits.
However there is a big difference between on line gambling on slots, bingo etc and betting on sports where real people are involved. Especially for horse racing, which is reliant on betting levies, to support an industry employing up to 100,000 people.
Tax is never a simple issue, like pensions !

It's well within living memory that punters used to have to pay 10% tax.

GenX0212

Cobbler_tone said:

snowlaser said:

HedgehogRulez said:

If the 25% TFLS was reduced id be rioting on the streets. It's a key element of my retirement strategy to utilise. Already narked by it being limited to £268k in recent years.

Ladders being pulled up by the oldies again! They've benefited from it, so why cant their children?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I'd reframe it as 'a tiny percentage of the country would have a mild grumble' and carry on.

It's easy to get caught up in the worry and I count myself in this category with planning to retire next year.
Currently I have about £180k tax free (£720k total) in DC and also a £35k DB Lump Sum so about £215k tax free availability.

But when you think about it objectively then even if I managed to accumulate the max LSA before I actually retire and IF the LSA was reduced by £100k then it would be 20% tax on £100k = £20k.  

Now I would be far from happy if that happened but objectively it is not the end of the world either when weighed against a total pension pot worth over £1m. 

So personally speaking I have decided to ignore all speculation, stick to the plan and wait and see.

HedgehogRulez

snowlaser said:

HedgehogRulez said:

If the 25% TFLS was reduced id be rioting on the streets. It's a key element of my retirement strategy to utilise. Already narked by it being limited to £268k in recent years.

Ladders being pulled up by the oldies again! They've benefited from it, so why cant their children?

Rioting on the streets?  So you're saying you'd put bricks through shop windows if you were only allowed to have £175,000 tax free instead of £268,000?

I don't think the Great British public would be behind you there.

When you say "they've benefitted from it" the "they" certainly isn't everyone over 65 because not many people will have had the absolute maximum lump sum, and many will have had no occupational pension at all nor lump sum, just their State Pension.

Don’t need others to be involved. One man army. Sharpening toothpicks as we speak!