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.
The OBR have been quite strong on their thoughts. Less growth, higher inflation than the BOE forecast & subsequently slower cutting of interest rates.
....good for savers then?!
Only that interest rates might not fall as quick as was anticipated. Prior thinking was that there will be 0.25% cuts in both November & December and over the next 18-24 months the base rate should settle around 3.5%.
Maybe rates will have to stay higher for longer. Heard that somewhere before.
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.
‘e.g.’ I think you mean and not ‘I.e.’ 😉😉😀
Sorry a pet hate for me when these aren’t used as I understand the grammar should be.
But I make you right it’s more logical to spend the pension pot or gift early to your beneficiaries than let it be swallowed in tax.
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.
‘e.g.’ I think you mean and not ‘I.e.’ 😉😉😀
Sorry a pet hate for me when these aren’t used as I understand the grammar should be.
But I make you right it’s more logical to spend the pension pot or gift early to your beneficiaries than let it be swallowed in tax.
My current thoughts are to limit IHT…… mortgage my main home up to the hilt and gift to children to buy both a property each and cross everything I live 7 years. That way takes the most part property out of my estate (as will be mostly debt).
The 2nd property Stamp duty increase was a big'un. Again comes in immediately.
Imagine that might be adding to people's costs who are moving this Friday.
Unless I've misunderstood this the Stamp Duty on second homes has gone up from 2% to 5%. That's £7.5k on a modest £250k property. It doesn't feel like a deal breaker to me.
The 2nd property Stamp duty increase was a big'un. Again comes in immediately.
Imagine that might be adding to people's costs who are moving this Friday.
Unless I've misunderstood this the Stamp Duty on second homes has gone up from 2% to 5%. That's £7.5k on a modest £250k property. It doesn't feel like a deal breaker to me.
Be very (VERY) modest anywhere round here for £250,000.
The 2nd property Stamp duty increase was a big'un. Again comes in immediately.
Imagine that might be adding to people's costs who are moving this Friday.
Unless I've misunderstood this the Stamp Duty on second homes has gone up from 2% to 5%. That's £7.5k on a modest £250k property. It doesn't feel like a deal breaker to me.
Have you found many houses in SE London for £250k ?
This doesn't just affect BTL properties. People buying jointly who currently own a property each & dont want to sell one (or both). I believe you can claim back the extra Stamp Duty if you sell the other property within 3 years......but maybe that has been scrapped in the small print.
The 2nd property Stamp duty increase was a big'un. Again comes in immediately.
Imagine that might be adding to people's costs who are moving this Friday.
Unless I've misunderstood this the Stamp Duty on second homes has gone up from 2% to 5%. That's £7.5k on a modest £250k property. It doesn't feel like a deal breaker to me.
The additional amount has gone from 3-5% immediately. So that’s in addition to the standard rates of SDLT. In an already dying BTL market that will deter some investors from buying and a few tears for those about to complete.
theres a storm brewing for renters, i think the fact there’s been no change to CGT for property will see far more exit the market than enter. Good if your a FTB but bad if a renter as I can only see rents increasing further.
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……
You've got until April 2027 to make any changes to your IHT planning.
Comments
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.
Description - straight brown hair, navy blue suit, lipstick.
Last seen in Westminster.
Maybe rates will have to stay higher for longer. Heard that somewhere before.
Sorry a pet hate for me when these aren’t used as I understand the grammar should be.
what could possibly go wrong…..😑
This doesn't just affect BTL properties. People buying jointly who currently own a property each & dont want to sell one (or both). I believe you can claim back the extra Stamp Duty if you sell the other property within 3 years......but maybe that has been scrapped in the small print.
theres a storm brewing for renters, i think the fact there’s been no change to CGT for property will see far more exit the market than enter. Good if your a FTB but bad if a renter as I can only see rents increasing further.
You've got until April 2027 to make any changes to your IHT planning.