2% more for second homes has just killed any entry to BTL - sorry for anyone renting, your rents will be going up even more.
Disappointed (but not surprised) to see pension now fall into IHT - Sounds like I need to spend spend spend or leverage a lot of debt.
Or be ok with contributing to a crumbling society? Why is that so bad?
In theory, were I to die after Apr 2027 but before i've retired/collected pension my estates IHT bill has likely just gone up north of £500k, so apology for being disappointed! But as I say, not surprised and there are ways to reduce this to a degree.
The FTSE 250 and AIM like the budget. FUD worked and they were over-sold.
What's interesting is that this is a Liz Truss budget - borrow heavily to invest (although, she also spunked a lot on the energy cap). But they have the OBR in their pocket. Hunt looks like a right mug.
Can someone explain what this means/how this actually works please?
As it stood, were you to die before 75, your pension pot (i.e. SIPP, not and DB scheme) passed to your survivors tax free. Now it will simply form part of your estate and be added to the overall estate.
I.E. if you were single and had a home worth £400k and £100k in the bank your estate would not pay IHT as at the £500k limit. Now if you have to include say a £350k of pension pot on top you are now £350k over the limit and the estate would pay £140k in IHT.
I have absolutely no issue in pension being included in an estate, it's an asset and no different to savings or property or shares. It's the change from not being included to being included that smarts.
Can someone explain what this means/how this actually works please?
As it stood, were you to die before 75, your pension pot (i.e. SIPP, not and DB scheme) passed to your survivors tax free. Now it will simply form part of your estate and be added to the overall estate.
I.E. if you were single and had a home worth £400k and £100k in the bank your estate would not pay IHT as at the £500k limit. Now if you have to include say a £350k of pension pot on top you are now £350k over the limit and the estate would pay £140k in IHT.
It would be £325k, not £500k if one assumes that a single person does not have a direct descendant (child/grandchild) to leave it to.
“5.58 Individual Savings Accounts, Lifetime ISA, Junior ISA
and Child Trust Fund
Allowance – Annual subscription limits will remain at
£20,000 for ISAs, £4,000 for
Lifetime ISAs and £9,000 for Junior ISAs and Child Trust
Funds until 5 April 2030.”
“5.61 British ISA – The government will not proceed with the
British ISA due to
mixed responses to the consultation launched in March 2024.”
I can find no mention of a cumulative ceiling but it does
mean that there will be no adjustment to allow for inflation to the annual
limit until at least 05 April 2030.
@golfaddick nieces and newphews who have no parents alive
Ok.......but that is not likely to affect many people.
And in that case you/they have over 2 years to address this. Start taking money out of the pension & spend it or give it to them directly. Or put the pension into Trust with them as beneficiaries.
@golfaddick If take money out then will pay tax and Sliding scale IHT if die within 7 years of donation
what I find strange is that you have a contract with a private company with terms and conditions that you have invested into over a number of years that the government just amend to suit them. There should be more transitional arrangements
I have absolutely no issue in pension being included in an estate, it's an asset and no different to savings or property or shares. It's the change from not being included to being included that smarts.
Just spend it ffs!
I agree, just changes my IHT planning. Will likely mean I retire earlier to give me a chance to spend it! Every cloud……
@golfaddick If take money out then will pay tax and Sliding scale IHT if die within 7 years of donation
what I find strange is that you have a contract with a private company with terms and conditions that you have invested into over a number of years that the government just amend to suit them. There should be more transitional arrangements
If you are a basic rate taxpayer you will pay 20% income tax (over the 25% Tax free allliwance) on withdrawals (up to the 40% threshold). All depends on what levels of tax you pay.
And the contract you have with your pension provider hasn't changed at all. Governments regularly move rates & levels of reliefs.
In a way they are just balancing up an anomaly. No real justification on why pension assets should be outside of your Estate when all other assets are included.
Comments
That £30 is in me pocket
What's interesting is that this is a Liz Truss budget - borrow heavily to invest (although, she also spunked a lot on the energy cap). But they have the OBR in their pocket. Hunt looks like a right mug.
Small print says the amount you can currently pay into an isa stays the same until 2030. I'm amazed.
I.E. if you were single and had a home worth £400k and £100k in the bank your estate would not pay IHT as at the £500k limit. Now if you have to include say a £350k of pension pot on top you are now £350k over the limit and the estate would pay £140k in IHT.
For higher rate taxpayers up from 20% to 24%.
FROM TODAY.
Buggers my clients who move money from Investment funds into their ISA's before the end of the tax year.
Tax free lump sum untouched
Tax relief untouched.
Lifetime & Annual allowances untouched
so you would pay IHT on £175k plus the pension pot of £350k in your example from 2027
It would be £325k, not £500k if one assumes that a single person does not have a direct descendant (child/grandchild) to leave it to.
Imagine that might be adding to people's costs who are moving this Friday.
As per the full Budget report at https://assets.publishing.service.gov.uk/media/672232d010b0d582ee8c4905/Autumn_Budget_2024__web_accessible_.pdf
“5.58 Individual Savings Accounts, Lifetime ISA, Junior ISA and Child Trust Fund
Allowance – Annual subscription limits will remain at £20,000 for ISAs, £4,000 for
Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2030.”
“5.61 British ISA – The government will not proceed with the British ISA due to
mixed responses to the consultation launched in March 2024.”
I can find no mention of a cumulative ceiling but it does mean that there will be no adjustment to allow for inflation to the annual limit until at least 05 April 2030.
And in that case you/they have over 2 years to address this. Start taking money out of the pension & spend it or give it to them directly. Or put the pension into Trust with them as beneficiaries.
what I find strange is that you have a contract with a private company with terms and conditions that you have invested into over a number of years that the government just amend to suit them. There should be more transitional arrangements
redman said: 2nd (or more) homes currently attract 3% extra stamp. From tomorrow that’s 5%. We completed on a house last week, timing!!
And the contract you have with your pension provider hasn't changed at all. Governments regularly move rates & levels of reliefs.
In a way they are just balancing up an anomaly. No real justification on why pension assets should be outside of your Estate when all other assets are included.