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Busy doing nothing
Posted: 03 November 2024 11:12:08(UTC)
#144

Joined: 01/03/2021(UTC)
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Busy doing nothing;324382 wrote:
Double death tax on unspent pensions

Type Basic rate recipient Higher rate recipient Additional rate recipient

Pension pot £1,000,000 £1,000,000 £1,000,000

Inheritance tax -£400,000 -£400,000 -£400,000
at 40%

Net after
inheritance -£600,000 -£600,000 -£600,000
tax

Income tax on -£120,000 -£240,000 -£270,000
withdrawal

Net amount
after income £480,000 £360,000 £330,000
tax

Effective
overall tax 52% 64% 67%
rate

Taken from the Telegraph.
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Busy doing nothing
Posted: 03 November 2024 11:52:41(UTC)
#145

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Sorry guys (as above) it is not as easy to read as intended, but i'm sure you can decipher it, BDN.
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Geoff Fitz
Posted: 03 November 2024 12:49:45(UTC)
#146

Joined: 21/02/2024(UTC)
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One of the concerns when Osborne opened everything up was that pensioners would be reckless and start spending on flash cars, dream holidays etc. It transpired that pensioners were much more frugal I wonder if this will prompt some to throw a little caution to the wind and spend spend spend, to quote a famous headline in the 60's. You have to be a certain age to get that one.

One thought as I reflect on this is that in March 2015 you were still forced to buy an annuity with your pension pot, people were screaming that the rates were poor but if they died early it was mostly gone. Possibly the zero IHT we have had for the last 10 years was too much of a good thing and the government has actually done something about it. It's just very unpalatable.
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1 user thanked Geoff Fitz for this post.
Alex Peard on 03/11/2024(UTC)
Neminem Laedit
Posted: 03 November 2024 13:02:07(UTC)
#157

Joined: 17/09/2018(UTC)
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Geoff Fitz;324397 wrote:
One of the concerns when Osborne opened everything up was that pensioners would be reckless and start spending on flash cars, dream holidays etc. It transpired that pensioners were much more frugal I wonder if this will prompt some to throw a little caution to the wind and spend spend spend, to quote a famous headline in the 60's. You have to be a certain age to get that one.


All the more reason to adopt a "Die with Zero" amortization-based drawdown, such as TPAW, and drip feed any excess withdrawals to beneficiaries.
https://moneyforums.city...imulator.aspx#post317033
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Robert D
Posted: 03 November 2024 13:21:24(UTC)
#147

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Geoff Fitz;324397 wrote:
One of the concerns when Osborne opened everything up was that pensioners would be reckless and start spending on flash cars, dream holidays etc. It transpired that pensioners were much more frugal I wonder if this will prompt some to throw a little caution to the wind and spend spend spend, to quote a famous headline in the 60's. You have to be a certain age to get that one.

One thought as I reflect on this is that in March 2015 you were still forced to buy an annuity with your pension pot, people were screaming that the rates were poor but if they died early it was mostly gone. Possibly the zero IHT we have had for the last 10 years was too much of a good thing and the government has actually done something about it. It's just very unpalatable.



It's only "unpalatable" because Obsorne should never have made pensions IHT exempt in the first place.

Good points though, and I'm sure it was in the government's thinking that clamping down on the loophole might encourage older folk to boost the economy by spending their cash. Annuities are also a more viable option than they were 10 years ago too.

The obvious question is why wealthy folk don't give their spare cash away to family or whoever in their lifetimes instead of hording it until death. The joy of giving, especially to loved ones, must be worth more than fretting over trying to avoid tax.
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9 users thanked Robert D for this post.
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MBA MBA
Posted: 03 November 2024 14:36:35(UTC)
#148

Joined: 16/12/2012(UTC)
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Robert D;324401 wrote:
Geoff Fitz;324397 wrote:
One of the concerns when Osborne opened everything up was that pensioners would be reckless and start spending on flash cars, dream holidays etc. It transpired that pensioners were much more frugal I wonder if this will prompt some to throw a little caution to the wind and spend spend spend, to quote a famous headline in the 60's. You have to be a certain age to get that one.

One thought as I reflect on this is that in March 2015 you were still forced to buy an annuity with your pension pot, people were screaming that the rates were poor but if they died early it was mostly gone. Possibly the zero IHT we have had for the last 10 years was too much of a good thing and the government has actually done something about it. It's just very unpalatable.



It's only "unpalatable" because Obsorne should never have made pensions IHT exempt in the first place.

Good points though, and I'm sure it was in the government's thinking that clamping down on the loophole might encourage older folk to boost the economy by spending their cash. Annuities are also a more viable option than they were 10 years ago too.

The obvious question is why wealthy folk don't give their spare cash away to family or whoever in their lifetimes instead of hording it until death. The joy of giving, especially to loved ones, must be worth more than fretting over trying to avoid tax.


What - how much - is wealthy? Is having a £1m house and £600k in one’s pension wealthy? How much of that £600k should I give away?

What age is each of us going to live to so we know how much we will need and how much I can give away?

What health and social care issues am I going to face - so I know how much I will need and how much I can give away?
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MBA MBA
Posted: 03 November 2024 14:39:23(UTC)
#158

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Lots of countries have no IHT.

Why has reeves not done away with the loopholes / Trusts for the Duke of Westminster types but she’s gone for people - especially in London and the South - with modest private pensions.
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Newbie
Posted: 03 November 2024 14:39:34(UTC)
#154

Joined: 31/01/2012(UTC)
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Robert D;324401 wrote:
Geoff Fitz;324397 wrote:
One of the concerns when Osborne opened everything up was that pensioners would be reckless and start spending on flash cars, dream holidays etc. It transpired that pensioners were much more frugal I wonder if this will prompt some to throw a little caution to the wind and spend spend spend, to quote a famous headline in the 60's. You have to be a certain age to get that one.

One thought as I reflect on this is that in March 2015 you were still forced to buy an annuity with your pension pot, people were screaming that the rates were poor but if they died early it was mostly gone. Possibly the zero IHT we have had for the last 10 years was too much of a good thing and the government has actually done something about it. It's just very unpalatable.



It's only "unpalatable" because Obsorne should never have made pensions IHT exempt in the first place.

Good points though, and I'm sure it was in the government's thinking that clamping down on the loophole might encourage older folk to boost the economy by spending their cash. Annuities are also a more viable option than they were 10 years ago too.

The obvious question is why wealthy folk don't give their spare cash away to family or whoever in their lifetimes instead of hording it until death. The joy of giving, especially to loved ones, must be worth more than fretting over trying to avoid tax.


Perhaps it is because they are worried about Long Term Care.
A person on benefits gets it a nil cost and gets to go into a home and get accustomed without fear of having to be uprooted to a new setting when they are frail and vulnerable.
A wealthy individual has to fork out £100k per. year for it and when their wealth gets depleted they are often left in no mans land as there are no spaces in the social ones and they also have to go through hoops and then be put in a completely new surroundings which often makes them feel even more vulnerable.
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8 users thanked Newbie for this post.
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Neminem Laedit
Posted: 03 November 2024 15:20:10(UTC)
#149

Joined: 17/09/2018(UTC)
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MBA MBA;324406 wrote:
Robert D;324401 wrote:
Geoff Fitz;324397 wrote:
One of the concerns when Osborne opened everything up was that pensioners would be reckless and start spending on flash cars, dream holidays etc. It transpired that pensioners were much more frugal I wonder if this will prompt some to throw a little caution to the wind and spend spend spend, to quote a famous headline in the 60's. You have to be a certain age to get that one.

One thought as I reflect on this is that in March 2015 you were still forced to buy an annuity with your pension pot, people were screaming that the rates were poor but if they died early it was mostly gone. Possibly the zero IHT we have had for the last 10 years was too much of a good thing and the government has actually done something about it. It's just very unpalatable.



It's only "unpalatable" because Obsorne should never have made pensions IHT exempt in the first place.

Good points though, and I'm sure it was in the government's thinking that clamping down on the loophole might encourage older folk to boost the economy by spending their cash. Annuities are also a more viable option than they were 10 years ago too.

The obvious question is why wealthy folk don't give their spare cash away to family or whoever in their lifetimes instead of hording it until death. The joy of giving, especially to loved ones, must be worth more than fretting over trying to avoid tax.


What - how much - is wealthy? Is having a £1m house and £600k in one’s pension wealthy? How much of that £600k should I give away?

What age is each of us going to live to so we know how much we will need and how much I can give away?

What health and social care issues am I going to face - so I know how much I will need and how much I can give away?



Amortization-based withdrawals is the best answer to these questions.

Aim to die (at least) with zero IHT liability, including downsizing the house, and giving the proceeds away to beneficiaries.

Ideally, aim to die with nothing...

SWR was always a bonkers way to withdraw. It's just got even more bonkers.
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Thrugelmir on 03/11/2024(UTC), Jay P on 03/11/2024(UTC), Guest on 03/11/2024(UTC), Dentmaster on 03/11/2024(UTC), Retire33 on 10/11/2024(UTC)
Raj K
Posted: 03 November 2024 15:30:13(UTC)
#159

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My simple answer to all of this will be eventually leave the UK for a place where they tax you on income and investment gains but no IHT. The benefits of UK no longer outweight the cons imo
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