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IHT changes!
RogerPensionGuy
Posts: 925 Forumite
I read more IHT rules being apparently getting changed before even getting changed in the 1st place.
It appears a 1 million pound limit is being increased to 2.5 million pounds now. A nice 150% change or increase and IHT of only 20% instead of 40% for farmers.
Maybe the IHT rules will change for DC pension pots as well, with so many people's plans wrecked, it would be reasonable to hope more changes will occur.
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It appears a 1 million pound limit is being increased to 2.5 million pounds now. A nice 150% change or increase and IHT of only 20% instead of 40% for farmers.
Maybe the IHT rules will change for DC pension pots as well, with so many people's plans wrecked, it would be reasonable to hope more changes will occur.
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BBC News - Government waters down farm inheritance tax plan - BBC News
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It is time we abolished IHT, not increasing it or messing around with it.3
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In general*, offspring should be standing on their own two feet and not be relying on an inheritance and therefore out of the just over 30000 estates that paid IHT in 2022, it is unlikely that more than a few plans would have been wrecked.RogerPensionGuy said:
Maybe the IHT rules will change for DC pension pots as well, with so many people's plans wrecked, it would be reasonable to hope more changes will occur.
***BBC News - Government waters down farm inheritance tax plan - BBC News
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Excellent news for all business owners ( not just farmers), since the BPR threshold has also been lifted to £2.5m per individual.
https://www.saffery.com/insights/news/planned-cap-on-apr-and-bpr-inheritance-tax-reliefs-raised-to-2-5m/#:~:text=Recap of the reforms taking effect from 6 April 2026&text=From 6 April 2026, 100,threshold will attract 50% relief.
APR and BPR were very important reliefs to assist in business succession planning for all business entities ( not just farmers), so more than doubling the reliefs from the paltry amounts originally proposed is a welcomed Xmas present for all affected businesses.1 -
My point is many people had augmented their plans on DC pots not getting involved with IHT as per the rules.OldScientist said:
In general*, offspring should be standing on their own two feet and not be relying on an inheritance and therefore out of the just over 30000 estates that paid IHT in 2022, it is unlikely that more than a few plans would have been wrecked.RogerPensionGuy said:
Maybe the IHT rules will change for DC pension pots as well, with so many people's plans wrecked, it would be reasonable to hope more changes will occur.
***BBC News - Government waters down farm inheritance tax plan - BBC News
But the DC pot IHT rules were very changed.
Makes planning very hard.
I still find strange the 375K IHT or 500K for property owners a strange quirk, how unfair for the many that pay rent.
Farmers IHT is 20% but others is 40% is just another quirk.
I agree people should stand on their own feet, but IHT rules should be stable and balanced for all.
Inheritance wealth transfer will continue to have many winners and loosers.
Did I read sumthink like 55% of people think they will get a fair inheritance, but only 50% of them 55% will actually get it.
IHT is a low hanging fruit and will be producing more and more tax receipts as time slips by.
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https://youtu.be/eqtk1vaHGf4?si=TQ_xRZFQNUWUcbGa
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https://youtu.be/uVyBIZDwECQ?si=9tga5RNGiBGq5L5-
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The noise coming from people dragged into IHT due to unused pension pots being included, is very faint.RogerPensionGuy said:I read more IHT rules being apparently getting changed before even getting changed in the 1st place.
It appears a 1 million pound limit is being increased to 2.5 million pounds now. A nice 150% change or increase and IHT of only 20% instead of 40% for farmers.
Maybe the IHT rules will change for DC pension pots as well, with so many people's plans wrecked, it would be reasonable to hope more changes will occur.
***BBC News - Government waters down farm inheritance tax plan - BBC News
So the political pressure to change is almost non existent, compared to farmers driving their tractors up Whitehall every month, and Labour MPs in rural seats worried about losing votes.
So no political pressure = no change.
Also as the pots are partly funded by ( largely 40%) tax relief, and were never meant to be a way of avoiding IHT, it is not an easy case to make anyway.2 -
That's just a quirk of the fact that the founding principle of the UK tax system is that by far the noblest way of getting rich is to have bought a house at the right moment in history, ideally in the South East of England, and money "earned" by that route must never be taxed in the same way as money earned by, say, in business, or, God forbid, working for a living. Silly, but the principle is so entrenched that complaining about it is about as likely to yield useful results as complaining about the weather.RogerPensionGuy said:
I still find strange the 375K IHT or 500K for property owners a strange quirk, how unfair for the many that pay rent.
On a practical level though the number of people who have paid rent so their lives, never been in a position to buy a property but somehow have aquired enough wealth to be dragged into inheritance tax must be very small.0 -
That's the nature of life - or in this case, death. Paying out DC pots free of IHT never made much sense, given that pensions are (still) intended to provide a tax-efficient way of saving for the pot-owner's old age, not a mechanism for avoiding IHT and passing on wealth to the next generation.RogerPensionGuy said:
My point is many people had augmented their plans on DC pots not getting involved with IHT as per the rules.OldScientist said:
In general*, offspring should be standing on their own two feet and not be relying on an inheritance and therefore out of the just over 30000 estates that paid IHT in 2022, it is unlikely that more than a few plans would have been wrecked.RogerPensionGuy said:
Maybe the IHT rules will change for DC pension pots as well, with so many people's plans wrecked, it would be reasonable to hope more changes will occur.
***BBC News - Government waters down farm inheritance tax plan - BBC News
But the DC pot IHT rules were very changed.
Makes planning very hard.
I still find strange the 375K IHT or 500K for property owners a strange quirk, how unfair for the many that pay rent.
Farmers IHT is 20% but others is 40% is just another quirk.
I agree people should stand on their own feet, but IHT rules should be stable and balanced for all.
Inheritance wealth transfer will continue to have many winners and loosers.
It'll be interesting to see how many claims there are against financial advisers who recommended transferring out of a DB scheme primarily because the member wanted to be able to leave the unused part of the pot to their offspring or other parties, and failed to put a caveat in their report warning that legislation is never cast in stone.Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!4 -
Marcon said:Paying out DC pots free of IHT never made much sense, given that pensions are (still) intended to provide a tax-efficient way of saving for the pot-owner's old age, not a mechanism for avoiding IHT and passing on wealth to the next generation.By the same token, agricultural property is expected to be a requirement for running a farm and not a mechanism for avoiding IHT.I think agricultural land values have more than doubled in the past decade or so, with current ROIs of 1% or so. As an investment it's a pretty poor choice, but as a way of avoiding IHT it's one of the better ones.N. Hampshire, he/him. Octopus Intelligent Go elec & Tracker gas / Vodafone BB / iD mobile. Kirk Hill Co-op member.Ofgem cap table, Ofgem cap explainer. Economy 7 cap explainer. Gas vs E7 vs peak elec heating costs, Best kettle!
2.72kWp PV facing SSW installed Jan 2012. 11 x 247w panels, 3.6kw inverter. 35 MWh generated, long-term average 2.6 Os.0 -
Bringing pension pots into the scope of IHT has plenty of scope to generate negative headlines for future (if not this) government given that it could be seen as a "tax on dying young" as well as an increase in unfairness between public and private sector employees.
If parents are unlucky enough to die after having accumulated a decent pot but before drawing / annuitising then their dependents could lose up to 40% of that pot. Such tax doesn't apply to defined benefit ie.public sector pensions.
Those caught in such a trap will only increase with the IHT allowance being frozen since 2009.
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The numbers will be small, but I know a potential divorcee who could well be in this situation.Aretnap said:
That's just a quirk of the fact that the founding principle of the UK tax system is that by far the noblest way of getting rich is to have bought a house at the right moment in history, ideally in the South East of England, and money "earned" by that route must never be taxed in the same way as money earned by, say, in business, or, God forbid, working for a living. Silly, but the principle is so entrenched that complaining about it is about as likely to yield useful results as complaining about the weather.RogerPensionGuy said:
I still find strange the 375K IHT or 500K for property owners a strange quirk, how unfair for the many that pay rent.
On a practical level though the number of people who have paid rent so their lives, never been in a position to buy a property but somehow have aquired enough wealth to be dragged into inheritance tax must be very small.0
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