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SIPP INHERITED NOW TAXED???
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Carl blue nose
Posted: 31 October 2024 18:54:23(UTC)
#72

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IHt planning and setting up trusts has been fundamental in trying to mitigate any IHT liability for your beneficiaries on your death, one of the main reasons why people like me have prioritised pension planning.

Surely, if the government can now decide to include pensions as an asset for IHT purposes, will this mean anyone that has set up trusts for IHT purposes outside of pension planning have these assets liable to IHT?

Will upper crust people like the duke of Westminster also have all his trusts revoked and have all of his assets liable for IHT, I very much doubt it.

Starmer has said he will protect working people? Well I’m a working person who has saved hard all his life to build a prosperous future for himself and his kids, only for this labour government to bend me over and relieve my kids of a significant amount of money when I die. And for this money they take, to be given to the NHS to mismanage, pay to house migrants, and keep the lazy and work shy.

Surely the government during the consultation period will introduce some form of transitional protection for those who have planned to leave their pension pots to their beneficiaries, someone earlier mentioned that they have prioritised pensions over ISAs for this reason.
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8 users thanked Carl blue nose for this post.
Guest on 31/10/2024(UTC), Raj K on 31/10/2024(UTC), Nigel Harris on 31/10/2024(UTC), OmegaMale on 31/10/2024(UTC), Alex Peard on 31/10/2024(UTC), Dexi on 01/11/2024(UTC), Tplease Parrish on 02/11/2024(UTC), Retire33 on 09/11/2024(UTC)
D Bergman
Posted: 31 October 2024 19:43:29(UTC)
#73

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Carl blue nose;324127 wrote:
IHt planning and setting up trusts has been fundamental in trying to mitigate any IHT liability for your beneficiaries on your death, one of the main reasons why people like me have prioritised pension planning.

Surely, if the government can now decide to include pensions as an asset for IHT purposes, will this mean anyone that has set up trusts for IHT purposes outside of pension planning have these assets liable to IHT?

Will upper crust people like the duke of Westminster also have all his trusts revoked and have all of his assets liable for IHT, I very much doubt it.

Starmer has said he will protect working people? Well I’m a working person who has saved hard all his life to build a prosperous future for himself and his kids, only for this labour government to bend me over and relieve my kids of a significant amount of money when I die. And for this money they take, to be given to the NHS to mismanage, pay to house migrants, and keep the lazy and work shy.

Surely the government during the consultation period will introduce some form of transitional protection for those who have planned to leave their pension pots to their beneficiaries, someone earlier mentioned that they have prioritised pensions over ISAs for this reason.



Just as an aside, I have seen similar comments about family trusts, usually about the Grosvenor estate.
Such comments are factually incorrect.

These trusts are set up in such a way that, although they do not pay IHT, they do pay an "wealth tax" at a recurring rate of 6% of the current value of the trust every 10 years (payable on the 10th anniversary of the trust's being set up).

So the estate actually pays a continuous tax rather than a one-off payment upon the death of the Duke of Westminster. Obviously, this can work out more or less than usual IHT, depending on the life span of the Duke.
This model allows the managers of the estate to plan much more effectively. The advantage for the Treasury is that it knows when tax will be paid, rather than waiting for the death of a Duke.

Such discretionary trusts are not a preserve of the nobility; any good financial planner can set one up for a family, but the costs of setting it up, management and trustees mean that it is only worth while for substantial amounts.

Note: I have no connection to the Dukes of Westminster or the Grosvenor Estate!
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Guest on 31/10/2024(UTC), Tim D on 31/10/2024(UTC), Sara G on 31/10/2024(UTC), Jay P on 31/10/2024(UTC), Carl blue nose on 31/10/2024(UTC), lenahan on 01/11/2024(UTC), Dexi on 01/11/2024(UTC), john brace on 01/11/2024(UTC), Mr TIPS on 04/11/2024(UTC)
Keith Cobby
Posted: 31 October 2024 20:11:42(UTC)
#74

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Firstly, I would abolish IHT, but in the absence of this would abolish these discretionary (family) trusts and give everyone the same IHT cliff edge on death. A payment of 6% each decade affords the very wealthy the planning opportunity denied to the rest of us, or increase the 6% to 10%+. As usual this budget has affected the middle class most adversely.
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2 users thanked Keith Cobby for this post.
Carl blue nose on 31/10/2024(UTC), WillG on 02/11/2024(UTC)
Tim D
Posted: 31 October 2024 20:38:46(UTC)
#57

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Mr Bean;324101 wrote:
There really is little point in a SIPP now - locked money and huge unknown risks that it just gets tapped up by govt


Really? The fundamental "avoid 40% now to pay 20% later" proposition (with TFC as a bonus on top) seems pretty sound for higher rate payers. Just back to where things used to be really; with hindsight the last decade's experiment with turning pensions into weird intergenerational wealth transfer vehicles as if we were all some sort of aristocracy will probably be seen as another failed ideological gimmick to be filed alongside child trust funds.

Random thought: no need to worry about the impact of the SIPP pot on your estate if you used it all to buy an annuity.
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4 users thanked Tim D for this post.
D Bergman on 31/10/2024(UTC), lenahan on 01/11/2024(UTC), Peanuts on 01/11/2024(UTC), Helen L on 01/11/2024(UTC)
D Bergman
Posted: 31 October 2024 21:23:15(UTC)
#75

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Keith Cobby;324133 wrote:
Firstly, I would abolish IHT, but in the absence of this would abolish these discretionary (family) trusts and give everyone the same IHT cliff edge on death. A payment of 6% each decade affords the very wealthy the planning opportunity denied to the rest of us, or increase the 6% to 10%+. As usual this budget has affected the middle class most adversely.


Let me suggest a solution:

Buy life insurance which can be written in trust (so outside your estate for IHT purposes), to cover expected IHT.

I assumed a single male, aged 34, with assets of £1.2 million.

It took me 5 minutes to check 2 of the main UK insurance companies, and for example, I based it on a 34 year old male, insurance of £350K (which is the IHT for the £1.2 million estate) and valid for 40 years.

The cost was about £35 per month, or say £420 per year.

Obviously this would cost more the older you are: a 25-year policy at the age of 64 would cost £5,000 per year (Legal & General online would only offer cover up to the age of 89).

Even for the 64 year old, 10 years' payment would be £50,000, while the Duke of Westminster's 6% payment on the same £1.2 million estate would work out at £72,000!

I am sure you could find an insurance policy better suited to your situation, with whole-of-life cover, but I have other things to do tonight.

So what are you complaining about?
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3 users thanked D Bergman for this post.
Jay P on 31/10/2024(UTC), Wave Action on 31/10/2024(UTC), Dexi on 01/11/2024(UTC)
Neminem Laedit
Posted: 31 October 2024 21:32:15(UTC)
#84

Joined: 17/09/2018(UTC)
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Emigrate

...to Cyprus ?

https://proactpartnershi...ts-of-cyprus-for-expats

5% flat rate Pension Tax (SP, DB, DC, the 25% Tax free cash ignored [i.e. non-taxable])
0% CGT (ex-Cyprus real estate)
0% IHT [the hardest to avoid, but possible, with legal advice]
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3 users thanked Neminem Laedit for this post.
MrBatch on 01/11/2024(UTC), Dexi on 01/11/2024(UTC), MBA MBA on 02/11/2024(UTC)
Wave Action
Posted: 31 October 2024 22:12:33(UTC)
#83

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D Bergman;324137 wrote:
Keith Cobby;324133 wrote:
Firstly, I would abolish IHT, but in the absence of this would abolish these discretionary (family) trusts and give everyone the same IHT cliff edge on death. A payment of 6% each decade affords the very wealthy the planning opportunity denied to the rest of us, or increase the 6% to 10%+. As usual this budget has affected the middle class most adversely.


Let me suggest a solution:

Buy life insurance which can be written in trust (so outside your estate for IHT purposes), to cover expected IHT.

I assumed a single male, aged 34, with assets of £1.2 million.

It took me 5 minutes to check 2 of the main UK insurance companies, and for example, I based it on a 34 year old male, insurance of £350K (which is the IHT for the £1.2 million estate) and valid for 40 years.

The cost was about £35 per month, or say £420 per year.

Obviously this would cost more the older you are: a 25-year policy at the age of 64 would cost £5,000 per year (Legal & General online would only offer cover up to the age of 89).

Even for the 64 year old, 10 years' payment would be £50,000, while the Duke of Westminster's 6% payment on the same £1.2 million estate would work out at £72,000!

I am sure you could find an insurance policy better suited to your situation, with whole-of-life cover, but I have other things to do tonight.

So what are you complaining about?


Watched this video a while ago and thought about posting it ? Wasn't sure if it still applies after yesterdays budget ? Anyway worth a listen covering a whole of life policy . No doubt there'll be an update soon.

https://www.youtube.com/watch?v=fjfWJPAqP8g
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2 users thanked Wave Action for this post.
Dentmaster on 31/10/2024(UTC), D Bergman on 01/11/2024(UTC)
Dentmaster
Posted: 31 October 2024 23:01:28(UTC)
#58

Joined: 23/01/2021(UTC)
Posts: 440
Tim D;324136 wrote:
Mr Bean;324101 wrote:
There really is little point in a SIPP now - locked money and huge unknown risks that it just gets tapped up by govt


Really? The fundamental "avoid 40% now to pay 20% later" proposition (with TFC as a bonus on top) seems pretty sound for higher rate payers. Just back to where things used to be really; with hindsight the last decade's experiment with turning pensions into weird intergenerational wealth transfer vehicles as if we were all some sort of aristocracy will probably be seen as another failed ideological gimmick to be filed alongside child trust funds.

Random thought: no need to worry about the impact of the SIPP pot on your estate if you used it all to buy an annuity.

But not everyone is getting 40 % relief. Yes maybe a higher earner. However i assume plenty are contributing and getting the lower relief , only to be taxed at 40 % having saved hard all their lives
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lenahan
Posted: 01 November 2024 02:05:43(UTC)
#53

Joined: 07/12/2017(UTC)
Posts: 242
Hilda Ogden;324106 wrote:
Elspeth Beaton;324068 wrote:
Possibly this inheritance tax change to SIPPs being put forward to 2007 is to allow Govt lawyers and/or politicians via new legislation time to “break” the Trust arrangement currently operating in DC SIPPs?
xxd09
PS - isTrust structure of SIPP relevant if tax is only charged once monies leave the tax wrapper ie when a withdrawal is actually made?

In my opinion most definitely relevant. On death the capital remains held by the trustee. Until the law changes, the pension asset stays with the trustees until they have acted on the deceased member's expression of wish. Only at that point do the assets leave the trustees to be distributed to the estate in accordance with the expression of wish. If IHT is to be levied on the pension assets of the deceased, it would be my guess that the law has to change. Because right now, the assets in the trust are simply not part of the deceased's estate. BTW, I am not a lawyer.


Trustees are not bound by the expression/nomination of wishes. The pension/trust settlement is at the discretion of the trustees hence most pensions are discrectionary trusts. This will be a complicated one for implementation so I wouldn't be so confident of hitting a 2 year deadline and it might even mean existing pensions are protected but new ones going forward will be under a different structure.
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lenahan
Posted: 01 November 2024 02:10:06(UTC)
#66

Joined: 07/12/2017(UTC)
Posts: 242
Never Twice Fooled;324109 wrote:
I need an action plan as our joint assets are well above the £1m.

As planning for inheritance tax I moved money from ISAs to SIPPs which has meant I have left no free cash to make gifts under the 7 year exemption limit.

It seems that I can do:

A. Leave substantial amounts to grandchildren from the SIPPS so that they can (their parents) can fully withdraw each year up to the total tax free amount currently £12,570.

B. I can also ensure I have income each year up to the £50,270 limit is max out the 20% tax rate limit. This can then be spent or funnelled back to a ISA until needed or indeed just gifted straightaway.

C. I can downsize and use the proceeds to gift to my children using the 7 year exemption.


Any other suggestions welcome.



Withdraw from pensions and re-invest in a carefully curated selection of Eis/Seis funds over coming years which can still be incredibly attractive investments in their own right whilst also being tax efficient estate planning tools. Lots of attractive reliefs and untouched in the budget. We actually need to see more investment into these vehicles for growth so terms may even improve.

Gift excess income to children who in turn pump it into their own pensions gaining the tax relief? Hopefully tax neutral but maybe even better if you pay 20% and they claim 40% or even higher marginal rates? Even better still if they are in public sector schemes with overly attractive AVC options. Some of these allow you to buy uncapped indexation annuities for a fraction of what they'd cost in the open market.

Keep buying Sovereigns and Brittanias slyly under the radar and off grid to physically pass to whoever? Hold for years and then free of Cgt when sold. Britannias are now worth over 2Kgbp for quite a small bit of Gold in your pocket.
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2 users thanked lenahan for this post.
SSJ on 01/11/2024(UTC), BM Shah on 04/11/2024(UTC)
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