Autumn Budget 24
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Hi Mike
I think it will be the case for many, drawing pension benefits may now be a consideration, and some additional estate planning may be needed.
Definitely a bit early to start anything too drastic, there is still a lot of detail to be finalised before we will know how the changes will be implemented and so how best to set out any new plans. -
Thanks Nik, very helpful.
It will certainly have me thinking of spending more and leaving less. I met a couple a few years ago who told me their way of thinking was that the holiday they were taking was half price - because if they didn't take it, half the cost of it would go in IHT.
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Thanks Nik, very helpful.
It will certainly have me thinking of spending more and leaving less. I met a couple a few years ago who told me their way of thinking was that the holiday they were taking was half price - because if they didn't take it, half the cost of it would go in IHT.
My mum and dad were lucky enough to retire young and have happily told me for many a year that their globe trotting ever since has been to help manage any IHT liability that my sister and I may be left with!
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@Nik-Burrows that my plan and will adopt that phrase as I quite like it
I'd already told my kids that they will inherit whatever I fail to spend and that I intend to spend it all, but probably won't. -
Pensions and IHT, does this remain free foe IHT for spouses? as per other assets?
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This hasn't changed, Mark. Pensions will be added to assets subject to IHT. However the 'spousal exemption' means any assets left to ones married spouse or civil partner(legal) is still exempt.
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There are existing rules(pre Oct 24 budget) around pensions passing to spouses before 75 vs after 75 in regards income tax on any withdrawals. This has not changed.
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Pensions and IHT, does this remain free foe IHT for spouses? as per other assets?
Hi Mark,
As Adam has said, based in the current understanding pension assets will now pass into the estate so will be treated in the same way as other assets and so would still pass IHT free between spouses.
A couple of wrinkles though. It looks like pension assets could be subject to "double taxation" if you die after age 75. They are subject to income tax in the hands of the beneficiary at the moment and the detail about how this will be treated under the new rules is yet to be clarified.
There are consultation papers in the system at the moment to look at how the broad policy of "Pensions form part of the estate" will actually play out in practice, so we can expect some detail in the next few months.
There is a reason that the implementation time line was set at 2027, there is still a bit to work through
Nik
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Just thinking, which is usually dangerous, but all the focus of commentary on the IHT changes concerning pensions is on DC schemes.
I wonder whether survivor pensions provided by DB pensions would be caught by the IHT change? I guess, by definition, the pension isn't for the benefit of the individual who accumulated the pension, and is therefore 'unused'?
If not, I wonder whether there will be a new breed of annuities which are wholly/mainly for the benefit of spouses/children? -
Hi Dangermouse,
I think this is why Nik suggested we wait to see the guidance. It is not my area of expertise, however an Annuity is not a pension. It is a converted pension into a legal contract between 'you' and the issuer. I would speculate that any post death benefit would amount to an asset of the estate. Until a discussion paper/guidance notes is issued we are just guessing.
Regards
Adam
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Just thinking, which is usually dangerous, but all the focus of commentary on the IHT changes concerning pensions is on DC schemes.
I wonder whether survivor pensions provided by DB pensions would be caught by the IHT change? I guess, by definition, the pension isn't for the benefit of the individual who accumulated the pension, and is therefore 'unused'?
If not, I wonder whether there will be a new breed of annuities which are wholly/mainly for the benefit of spouses/children?The current indication is that beneficiary pensions within a DB scheme will be classed as outside the estate.
Given that they are paid as income and taxed in the hands of the recipient as income there is already tax claimed on this benefit.
It is also likely that an annuity with ongoing beneficiary payments after death would also be treated as outside the estate.
The main "target" is unused pension pots that at the moment pass as a tax free lump of cash on death before 75.
Cheers
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