scooter
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Post by scooter on Oct 30, 2024 15:26:18 GMT
I guess i will be affected by this, if anything can affect you when you are dead, but I think these pension pots are all from untaxed money (tax is added back to contributions) so it is really the govt taking back what you didn't use of what they gave you in the first place. Hard to argue against really if my understanding is correct.
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Greenwood2
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Post by Greenwood2 on Oct 30, 2024 15:40:12 GMT
NI for small businesses with low paid workers will be rough. The reduction in threshold is very big (About £9,000 - £5000 I think), apart from the rate increase and then there's increase in minimum wage. Not going to be good for people on low wages trying to get or keep a job. Rumblings already that small businesses will fold. No tax rises for workers, but will some of them have a job.
And IHT on farms may mean the end of many family farms.
Now wait and see what devils were hidden in the detail.
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jlend
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Post by jlend on Oct 30, 2024 15:43:07 GMT
I guess i will be affected by this, if anything can affect you when you are dead, but I think these pension pots are all from untaxed money (tax is added back to contributions) so it is really the govt taking back what you didn't use of what they gave you in the first place. Hard to argue against really if my understanding is correct. Basically, assuming something like a SIPP. The pension administrator will pay any inheritance tax due on your pension pot at 40%. Then if you died before 75 your beneficiary gets the rest tax free as they do now, subject to the pension lifetime allowance. If you are over 75 when you die then the beneficiary will pay income tax to withdraw what is left.
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Post by mostlywrong on Oct 30, 2024 15:48:47 GMT
I guess i will be affected by this, if anything can affect you when you are dead, but I think these pension pots are all from untaxed money (tax is added back to contributions) so it is really the govt taking back what you didn't use of what they gave you in the first place. Hard to argue against really if my understanding is correct. Good summary.
And thanks for the link which I will read in slow time.
IIRC, the original position was that, on death, the personal pension pots were distributed by the trustees of the pension scheme, usually in accordance with the deceased's wishes, but not always so. Hence, it was argued, the rights to the pension pot were not controlled by the deceased, so should not be part of the deceased's estate.
The Chancellor appears to have decided that, from 2026 (tbc), the pot now sits in the estate. I think that will catch a lot of people, especially as the Chancellor has not raised the IHT threshold. Inflation is doing a lot of damage to people's long-term plans and this will just add to the problems!
Add the value of your average house to your bank accounts and average investments, and then add an average pension pot on top, and that is your nil-rate band all used up.
Bearing in mind that we have not yet seen the details, the obvious solution will be to cash in your personal pension and take the monthly cash (but you might be paying 20% tax on it). Then bung that cash at your beneficiaries. Cheaper than 40% tax.
MW
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james100
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Post by james100 on Oct 30, 2024 15:49:57 GMT
NI for small businesses with low paid workers will be rough. The reduction in threshold is very big (About £9,000 - £5000 I think), apart from the rate increase and then there's increase in minimum wage. Not going to be good for people on low wages trying to get or keep a job. Rumblings already that small businesses will fold. No tax rises for workers, but will some of them have a job. And IHT on farms may mean the end of many family farms. Now wait and see what devils were hidden in the detail. Supplementary docs here: www.gov.uk/government/publications/autumn-budget-2024
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daveb
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Post by daveb on Oct 30, 2024 15:57:51 GMT
"Add the value of your average house to your bank accounts and average investments, and then add an average pension pot on top, and that is your nil-rate band all used up."
Maybe I haven't understood you, but I'm not sure this will be the relevant sum for most people. Surely it is only the unused pension pot that will be brought into the estate. Most people will have used most of their pot by the time they die, possibly all of it if they just bought an annuity. Average pension pot implies the (hopefully) biggish sum built up by the day you retire.
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Post by mostlywrong on Oct 30, 2024 16:20:04 GMT
"Add the value of your average house to your bank accounts and average investments, and then add an average pension pot on top, and that is your nil-rate band all used up."
Maybe I haven't understood you, but I'm not sure this will be the relevant sum for most people. Surely it is only the unused pension pot that will be brought into the estate. Most people will have used most of their pot by the time they die, possibly all of it if they just bought an annuity. Average pension pot implies the (hopefully) biggish sum built up by the day you retire.
My wording was not precise; yours is much better. 
MW
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Post by bracknellboy on Oct 30, 2024 16:33:43 GMT
I guess i will be affected by this, if anything can affect you when you are dead, but I think these pension pots are all from untaxed money (tax is added back to contributions) so it is really the govt taking back what you didn't use of what they gave you in the first place. Hard to argue against really if my understanding is correct. Basically, assuming something like a SIPP. The pension administrator will pay any inheritance tax due on your pension pot at 40%. Then if you died before 75 your beneficiary gets the rest tax free as they do now, subject to the pension lifetime allowance. If you are over 75 when you die then the beneficiary will pay income tax to withdraw what is left. This description doesn't make any sense to me. It is suggesting that IHT is "paid in advance" by the pension administrator ! i.e. before you die. EDIT: Ok, I think I understand what you were trying to say. Anyway, seems an odd way to do things because the pension administrator can't themselves know what IHT is due, since that is a function of the value of the whole estate.
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Post by mostlywrong on Oct 30, 2024 16:39:12 GMT
This is an interesting one:
5.21 Making Tax Digital for income tax Self Assessment – The government is
committed to delivering Making Tax Digital (MTD) for income tax Self Assessment.
The government will expand the rollout of MTD to those with incomes over £20,000
by the end of this Parliament, and will set out the precise timing for this at a future
fiscal event.
I knew there were plans for all landlords to report direct to HMRC but did not know that income tax was in line for Making Tax Digital.
I assume that anyone earning more than £50k pa will already be committed to Self-Assessment (and that will be mostly digital).
£20k sounds a bit low to me. Especially by 2028-29.
MW
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Post by mostlywrong on Oct 30, 2024 16:42:24 GMT
Basically, assuming something like a SIPP. The pension administrator will pay any inheritance tax due on your pension pot at 40%. Then if you died before 75 your beneficiary gets the rest tax free as they do now, subject to the pension lifetime allowance. If you are over 75 when you die then the beneficiary will pay income tax to withdraw what is left. This description doesn't make any sense to me. It is suggesting that IHT is "paid in advance" by the pension administrator ! i.e. before you die. EDIT: Ok, I think I understand what you were trying to say. Anyway, seems an odd way to do things because the pension administrator can't themselves know what IHT is due, since that is a function of the value of the whole estate. I guess the condition will be that the trustees pay the 40% tax before releasing the pot (post probate) and the executor claims back the tax paid when balancing the final estate.
A nightmare for the executor.
MW
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jlend
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Post by jlend on Oct 30, 2024 17:43:45 GMT
This description doesn't make any sense to me. It is suggesting that IHT is "paid in advance" by the pension administrator ! i.e. before you die. EDIT: Ok, I think I understand what you were trying to say. Anyway, seems an odd way to do things because the pension administrator can't themselves know what IHT is due, since that is a function of the value of the whole estate. I guess the condition will be that the trustees pay the 40% tax before releasing the pot (post probate) and the executor claims back the tax paid when balancing the final estate.
A nightmare for the executor.
MW
Yes,there is the expectation that the executors use a hmrc calculator to work out the tax, the pension trustees pay their portion. The executors deal with any other IHT. The executors are responsible for any tidy up.
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adrianc
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Post by adrianc on Oct 30, 2024 18:54:07 GMT
Liz Truss doesn't like the Reeves budget. It's going to be painful. Boo. Hoo. Anyway... Business Property Relief and Agricultural Property Relief changes are significant. A lot of farmers and their children will be reeling. "From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all but for assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%." Mmm. Most of the proper farming farms round here operate as limited companies. The farmer doesn't own the farm. The limited company does (and it wouldn't surprise me at all if there was an opco/propco setup). The farmer owns shares in the limited company. So do his children, other family members, etc. This IHT change won't affect them. Meanwhile, my far-from-poor ex-expensive-London staunchly-Tory next door neighbour has 30 acres for self-propelled-tesco-value-lasagne equine purposes. They also have a smallish flock of sheep for tax purposes, to qualify as a "farm" for IHT. This IHT chance will affect them. |
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keitha
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Post by keitha on Oct 30, 2024 19:39:24 GMT
I had a friend in a similar position and of course his small flock of sheep used to get him EU farming subsidies he said the sheep more than covered their costs each year, and of course he made a little pocket money selling the lambs ( bar a few he kept to replace casualties, and the odd barren sheep )
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michaelc
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Post by michaelc on Oct 30, 2024 20:11:08 GMT
I had a friend in a similar position and of course his small flock of sheep used to get him EU farming subsidies he said the sheep more than covered their costs each year, and of course he made a little pocket money selling the lambs ( bar a few he kept to replace casualties, and the odd barren sheep ) Were they good lookers ?
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keitha
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Post by keitha on Oct 30, 2024 21:14:18 GMT
I had a friend in a similar position and of course his small flock of sheep used to get him EU farming subsidies he said the sheep more than covered their costs each year, and of course he made a little pocket money selling the lambs ( bar a few he kept to replace casualties, and the odd barren sheep ) Were they good lookers ? not Welsh ....
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