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Savings and Investments thread
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If you make it to 75, whilst it remains free from inheritance tax, it would then be taxed at the beneficiaries marginal rate if they draw it. So a lot of moving parts as to whether it's best to or not I would say depending on yours and your beneficiaries positions. If your beneficiaries for instance are 45% tax payers it would make more sense to Pay IHT at 40%.redman said:golfaddick said:
Due to your age I'd definitely look at taking the money from your pension rather than your ISACharltonKerry said:Thanks for your input everyone. I suppose I’m in a slightly different predicament than most on here, in so much as my pension won’t get much higher than it is now as I can only pay a little amount in year as I’m retired, also if things go to plan I won’t need to raid my pension fund for around six to 7 years time (I’m 71 at the moment), I'm investing into our ISA’s to the maximum value I can as the company I owned are repaying a buy back loan for my shares which should be paid up in around 4 years, (I’ve already paid my entrepreneurs tax to the tax man in January).I have a considerable out lay in the next 18 months which my ISA’s were meant to be covering, but by luck the tax free money I can take out of my pension is roughly equivalent to my upcoming outlay. So it’s a case of deciding what is the best way for to go forward for me / us, think a phone call to financial advisor will be happening early next week.
Why are you so firm on this advice? With money in a scheme protected from inheritance tax, the advice I received was to use all cash reserves and ISA's before withdrawing from your pension pot.
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Fcuk em. We all have worked hard to earn our money, to provide for our future but the one thing I have learned over many years is that government will go after every last penny they can and then piss it up the wall on some stupid scheme or other.
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ISA's are totally tax free. Pensions only 25%. Take that out & the rest is taxed at your marginal rate. With the State Penson now virtually using up your Personal Alowance then everyone will pay at least 20% tax on anything taken after the TFC. Why not use your ISA's for retirement planning instead.redman said:golfaddick said:
Due to your age I'd definitely look at taking the money from your pension rather than your ISACharltonKerry said:Thanks for your input everyone. I suppose I’m in a slightly different predicament than most on here, in so much as my pension won’t get much higher than it is now as I can only pay a little amount in year as I’m retired, also if things go to plan I won’t need to raid my pension fund for around six to 7 years time (I’m 71 at the moment), I'm investing into our ISA’s to the maximum value I can as the company I owned are repaying a buy back loan for my shares which should be paid up in around 4 years, (I’ve already paid my entrepreneurs tax to the tax man in January).I have a considerable out lay in the next 18 months which my ISA’s were meant to be covering, but by luck the tax free money I can take out of my pension is roughly equivalent to my upcoming outlay. So it’s a case of deciding what is the best way for to go forward for me / us, think a phone call to financial advisor will be happening early next week.
Why are you so firm on this advice? With money in a scheme protected from inheritance tax, the advice I received was to use all cash reserves and ISA's before withdrawing from your pension pot.
But again, everyone's circumstances are different & what's right for one might not be right for someone else.
As @Rob7Lee says, after age 75 the money is taxed at the beneficiaries marginal rate.
Take out the 25% tax free and re-invest in your ISA.....which are then also transferable tax-free to your spouse on death. Then leave the remaining pension fund to your dependents.
But as discussed above, I wouldn't put it past the next Labour Government to change the current set up & tax the fund on death.
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According to The Telegraph his DPP pension, awarded by the Conservative government, is worth £700K. He’s also said that it wouldn’t be exempt from any changes a Labour government do bring in.golfaddick said:
The plain answer.....no-one knows.CharltonKerry said:I've got a fair amount (well to me it is) which I like everyone could take out 25% with the general election up, what are you expecting to happen re pension and there associated cash free lump sum after a change of government? Don’t want this to turn into a political debate, that’s why I didn’t ask in the election thread. Apparently there’s an article in either the times or Sunday times on this matter but it’s behind a pay wall.
I have asked my financial adviser this question and as yet he hasn’t responded.
I very much doubt they would mess around with the 25% TFC allowance. It is now capped at £268, 275 so "25%" is a bit of a misnomer.
The Labour Party have said that they would re-introduce the Lifetime Allowance, but they've not announced at what amount. In any case, it is virtually unheard of changes to be applied retrospectively & in the past protections have been put in place to secure what you currently have.
The big question over the years is will tax relief be altered, and it has been mooted that even under the Tories it was going to be changed to a level figure for all.....either 25% or 30%.
The one thing I would ask any Labour campaigner who knocked on my door is.....why can't we all have our own individual tax unregistered scheme like Kier Starmer has. Look it up. Oh the hypocrisy.It’s a very good sum, but you’d think it was multi-millions the way it is described and is it better/worse than many DB schemes that were around previously (a few still are)? Is there something else I’m missing here? Your employer provides you with a pension. Do you turn it down?0 -
I think the initial issue was his pension didn’t have an LTA when everyone else’s did, Labour voted against the removal of the limit (which had they of won would have meant Starmer still kept his no limit).TelMc32 said:
According to The Telegraph his DPP pension, awarded by the Conservative government, is worth £700K. He’s also said that it wouldn’t be exempt from any changes a Labour government do bring in.golfaddick said:
The plain answer.....no-one knows.CharltonKerry said:I've got a fair amount (well to me it is) which I like everyone could take out 25% with the general election up, what are you expecting to happen re pension and there associated cash free lump sum after a change of government? Don’t want this to turn into a political debate, that’s why I didn’t ask in the election thread. Apparently there’s an article in either the times or Sunday times on this matter but it’s behind a pay wall.
I have asked my financial adviser this question and as yet he hasn’t responded.
I very much doubt they would mess around with the 25% TFC allowance. It is now capped at £268, 275 so "25%" is a bit of a misnomer.
The Labour Party have said that they would re-introduce the Lifetime Allowance, but they've not announced at what amount. In any case, it is virtually unheard of changes to be applied retrospectively & in the past protections have been put in place to secure what you currently have.
The big question over the years is will tax relief be altered, and it has been mooted that even under the Tories it was going to be changed to a level figure for all.....either 25% or 30%.
The one thing I would ask any Labour campaigner who knocked on my door is.....why can't we all have our own individual tax unregistered scheme like Kier Starmer has. Look it up. Oh the hypocrisy.It’s a very good sum, but you’d think it was multi-millions the way it is described and is it better/worse than many DB schemes that were around previously (a few still are)? Is there something else I’m missing here? Your employer provides you with a pension. Do you turn it down?
All a storm in a tea cup, but either everyone should have a limit or no one. Keep it simple. Personally I’d like the no limit, but then I would say that as helps me.3 -
I'd like to know what the annual payout is. It will no doubt be index linked and have a spouse/widows element. The government tends to price these at 20x, when, in the market, 30x or more would be a mark to market. So '700k' could really be 1.2m to anyone in a real market.TelMc32 said:
According to The Telegraph his DPP pension, awarded by the Conservative government, is worth £700K. He’s also said that it wouldn’t be exempt from any changes a Labour government do bring in.golfaddick said:
The plain answer.....no-one knows.CharltonKerry said:I've got a fair amount (well to me it is) which I like everyone could take out 25% with the general election up, what are you expecting to happen re pension and there associated cash free lump sum after a change of government? Don’t want this to turn into a political debate, that’s why I didn’t ask in the election thread. Apparently there’s an article in either the times or Sunday times on this matter but it’s behind a pay wall.
I have asked my financial adviser this question and as yet he hasn’t responded.
I very much doubt they would mess around with the 25% TFC allowance. It is now capped at £268, 275 so "25%" is a bit of a misnomer.
The Labour Party have said that they would re-introduce the Lifetime Allowance, but they've not announced at what amount. In any case, it is virtually unheard of changes to be applied retrospectively & in the past protections have been put in place to secure what you currently have.
The big question over the years is will tax relief be altered, and it has been mooted that even under the Tories it was going to be changed to a level figure for all.....either 25% or 30%.
The one thing I would ask any Labour campaigner who knocked on my door is.....why can't we all have our own individual tax unregistered scheme like Kier Starmer has. Look it up. Oh the hypocrisy.It’s a very good sum, but you’d think it was multi-millions the way it is described and is it better/worse than many DB schemes that were around previously (a few still are)? Is there something else I’m missing here? Your employer provides you with a pension. Do you turn it down?1 -
The article wasn't bad by ST Money standards (they're usually mis-informed or just puff pieces).golfaddick said:
Due to your age I'd definitely look at taking the money from your pension rather than your ISA.CharltonKerry said:Thanks for your input everyone. I suppose I’m in a slightly different predicament than most on here, in so much as my pension won’t get much higher than it is now as I can only pay a little amount in year as I’m retired, also if things go to plan I won’t need to raid my pension fund for around six to 7 years time (I’m 71 at the moment), I'm investing into our ISA’s to the maximum value I can as the company I owned are repaying a buy back loan for my shares which should be paid up in around 4 years, (I’ve already paid my entrepreneurs tax to the tax man in January).I have a considerable out lay in the next 18 months which my ISA’s were meant to be covering, but by luck the tax free money I can take out of my pension is roughly equivalent to my upcoming outlay. So it’s a case of deciding what is the best way for to go forward for me / us, think a phone call to financial advisor will be happening early next week.
Key things that were mentioned:
- apparently, Rachel Reeves has ruled out an emergency summer budget
- in any case, anything big would require legislation and take time
- generally, these things are then timed to come in in the next tax year, for simplicity
- therefore, the overall advice, which Golfie will certainly agree with, is not to make any quick decisions on pensions, based on speculation
I wish governments would be principled on this. Ever since Gordon Brown raided pensions, it's been a free for all as politicians have worked out that people have no idea how much they've been ripped off over the years.
For me, I would limit the amount of tax efficiency on the money going in but a cap is simply immoral as it punishes prudent investment decisions.
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It was notable last week that one of the shadow Treasury spokesman carefully caveated, "We won't raise VAT, income tax and national insurance," with the rider, " .. for working people."
So that doesn't rule out raids on dividends, pensions, savings tax, stamp duty, capital gains, including on your main home, ISAs, EIS, VCTs, entrepreneurs' relief, employers' NI, corporation tax, etc.1 -
A question. Am I correct in saying that a pension pot would be passed on to my beneficiaries tax free and it would only be taxed when they drew down from the pot? Or have I got this totally wrong and it is taxed at their marginal rate at the time of death.Rob7Lee said:
If you make it to 75, whilst it remains free from inheritance tax, it would then be taxed at the beneficiaries marginal rate if they draw it. So a lot of moving parts as to whether it's best to or not I would say depending on yours and your beneficiaries positions. If your beneficiaries for instance are 45% tax payers it would make more sense to Pay IHT at 40%.redman said:golfaddick said:
Due to your age I'd definitely look at taking the money from your pension rather than your ISACharltonKerry said:Thanks for your input everyone. I suppose I’m in a slightly different predicament than most on here, in so much as my pension won’t get much higher than it is now as I can only pay a little amount in year as I’m retired, also if things go to plan I won’t need to raid my pension fund for around six to 7 years time (I’m 71 at the moment), I'm investing into our ISA’s to the maximum value I can as the company I owned are repaying a buy back loan for my shares which should be paid up in around 4 years, (I’ve already paid my entrepreneurs tax to the tax man in January).I have a considerable out lay in the next 18 months which my ISA’s were meant to be covering, but by luck the tax free money I can take out of my pension is roughly equivalent to my upcoming outlay. So it’s a case of deciding what is the best way for to go forward for me / us, think a phone call to financial advisor will be happening early next week.
Why are you so firm on this advice? With money in a scheme protected from inheritance tax, the advice I received was to use all cash reserves and ISA's before withdrawing from your pension pot.
A second question. If there was still an element of 25% tax free within the pot, would this protection be retained by the beneficiary?0 -
You are correct in saying that upon death (at any time) your pension "pot" is inherited tax free by the beneficiaries as DC pensions do not form part of your Estate.redman said:
A question. Am I correct in saying that a pension pot would be passed on to my beneficiaries tax free and it would only be taxed when they drew down from the pot? Or have I got this totally wrong and it is taxed at their marginal rate at the time of death.Rob7Lee said:
If you make it to 75, whilst it remains free from inheritance tax, it would then be taxed at the beneficiaries marginal rate if they draw it. So a lot of moving parts as to whether it's best to or not I would say depending on yours and your beneficiaries positions. If your beneficiaries for instance are 45% tax payers it would make more sense to Pay IHT at 40%.redman said:golfaddick said:
Due to your age I'd definitely look at taking the money from your pension rather than your ISACharltonKerry said:Thanks for your input everyone. I suppose I’m in a slightly different predicament than most on here, in so much as my pension won’t get much higher than it is now as I can only pay a little amount in year as I’m retired, also if things go to plan I won’t need to raid my pension fund for around six to 7 years time (I’m 71 at the moment), I'm investing into our ISA’s to the maximum value I can as the company I owned are repaying a buy back loan for my shares which should be paid up in around 4 years, (I’ve already paid my entrepreneurs tax to the tax man in January).I have a considerable out lay in the next 18 months which my ISA’s were meant to be covering, but by luck the tax free money I can take out of my pension is roughly equivalent to my upcoming outlay. So it’s a case of deciding what is the best way for to go forward for me / us, think a phone call to financial advisor will be happening early next week.
Why are you so firm on this advice? With money in a scheme protected from inheritance tax, the advice I received was to use all cash reserves and ISA's before withdrawing from your pension pot.
A second question. If there was still an element of 25% tax free within the pot, would this protection be retained by the beneficiary?
However, once in the hands of the beneficiaries the following rules apply -
If you were aged under 75 at the time of your death then any monies subsequently taken out is tax free, be it a lump sum or income.
If you were 75 or over at the time of your death then any money taken out by the beneficiaries would be taxed at their marginal rate.
So the nonsense that Pensions are IHT free is a bit of a red herring because if you are 75+ then any money taken out, 25% or not, is taxable. Hence why I said to a PP that it's a good idea to take your 25% when you can - especially as ISA's are totally tax free at any given point.3 - Sponsored links:
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Thanks Golfie.
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£700k is a very sizeable or for something like 5 years work too 🙂WishIdStayedinthePub said:
I'd like to know what the annual payout is. It will no doubt be index linked and have a spouse/widows element. The government tends to price these at 20x, when, in the market, 30x or more would be a mark to market. So '700k' could really be 1.2m to anyone in a real market.TelMc32 said:
According to The Telegraph his DPP pension, awarded by the Conservative government, is worth £700K. He’s also said that it wouldn’t be exempt from any changes a Labour government do bring in.golfaddick said:
The plain answer.....no-one knows.CharltonKerry said:I've got a fair amount (well to me it is) which I like everyone could take out 25% with the general election up, what are you expecting to happen re pension and there associated cash free lump sum after a change of government? Don’t want this to turn into a political debate, that’s why I didn’t ask in the election thread. Apparently there’s an article in either the times or Sunday times on this matter but it’s behind a pay wall.
I have asked my financial adviser this question and as yet he hasn’t responded.
I very much doubt they would mess around with the 25% TFC allowance. It is now capped at £268, 275 so "25%" is a bit of a misnomer.
The Labour Party have said that they would re-introduce the Lifetime Allowance, but they've not announced at what amount. In any case, it is virtually unheard of changes to be applied retrospectively & in the past protections have been put in place to secure what you currently have.
The big question over the years is will tax relief be altered, and it has been mooted that even under the Tories it was going to be changed to a level figure for all.....either 25% or 30%.
The one thing I would ask any Labour campaigner who knocked on my door is.....why can't we all have our own individual tax unregistered scheme like Kier Starmer has. Look it up. Oh the hypocrisy.It’s a very good sum, but you’d think it was multi-millions the way it is described and is it better/worse than many DB schemes that were around previously (a few still are)? Is there something else I’m missing here? Your employer provides you with a pension. Do you turn it down?1 -
Got a random £50 credit into our account today from NS&I PB’s. It referenced my wife’s NS&I account number. Rang NS&I and they couldn’t provide any useful information except it was maybe a June prize in early which I doubt seeing as the draw was only today and it normally takes a week or more for the money to come in. Anyone else ever had this happen?1
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£125 this month on £39k.1
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£100 this month on £22k0
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£125 for Victor on £50k + £100 for Margaret on £15k0
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£75 for me, £100 for my wife, both on full holding. Going to start taking the cash out to max out ISA allowance for this year.0
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Sod all about half holding0
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£150 for me, £125 for the missus - both max holdings.
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Nothing for me (about £25.5k), £250 for Mrs R7L on max holding, £50 for daughter (about 26k). Father in law £125 (max holding) and his girlfriend who has £5k won £150.0
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£250 for me and £100 for wife both max holding0
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£50 max holding0
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£200 on max holding0
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£100 for me and £175 for the wife, both max holdings.0
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£125 today on a £45k holding.0
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£225 max holding0
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£100 for me £175 for the wife. Each 44k holding0
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£150 for me. Not bad on its own, but I am still well below 4% yield so far this year. (on 43k) I'm still waiting for Ernie to pull his finger out.0
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PragueAddick said:£150 for me. Not bad on its own, but I am still well below 4% yield so far this year. (on 43k) I'm still waiting for Ernie to pull his finger out.
I'm running annually at about 4.5% on two max holdings. Happy with that.
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£125 on a £40k holding. Not great but better than the last two months' blanks!0
