Budget

[Lootman]

a lot of the rich will be using their pension to bypass IHT rather than withdrawing money from it which would be taxed at higher rates ( and if they die before age 75 their beneficiaries will even be able to draw down the inherited pension without paying tax on it).

A lot? I would be very surprised if more than a very small number of people would see that as an effective strategy to mitigate IHT.

[Tedx]

a lot of the rich will be using their pension to bypass IHT rather than withdrawing money from it which would be taxed at higher rates ( and if they die before age 75 their beneficiaries will even be able to draw down the inherited pension without paying tax on it).

A lot? I would be very surprised if more than a very small number of people would see that as an effective strategy to mitigate IHT.

I think you would be surprised. If you have an IHT issue (and many more do have these days) and passing on assets is a priority, then exhausting all other income/capital to the threshold makes sense. Plus, pensions are paid out generally very quickly on death. No waiting for probate.

[Lootman]

a lot of the rich will be using their pension to bypass IHT rather than withdrawing money from it which would be taxed at higher rates ( and if they die before age 75 their beneficiaries will even be able to draw down the inherited pension without paying tax on it).

A lot? I would be very surprised if more than a very small number of people would see that as an effective strategy to mitigate IHT.

I think you would be surprised. If you have an IHT issue (and many more do have these days) and passing on assets is a priority, then exhausting all other income/capital to the threshold makes sense. Plus, pensions are paid out generally very quickly on death. No waiting for probate.

Do you think so?

Suppose I have built up an ISA worth a million. Would I think it a good idea to withdraw £40,000 a year from it, rather than subscribing £20,000 a year to it, just so I can fund a SIPP at the maximum of £60,000 annually, and hope that I die before I am 75?

[Tedx]

No, I'm not saying what you suggest is a good idea.

But if you already have a big pension fund in 2015, it might be worth leaving the pension till last.

The pension is still IHT free after age 75.

You need to have the earnings to put 60k into a pension anyway.

[mc2fool]

Martin Lewis: "Government student loan plans are a big increase to the cost of uni – it’s effectively a lifelong graduate tax for most."

https://www.moneysavingexpert.com/pressoffice/2022/02/martin-lewis---government-student-loan-plans-are-a-big-increase-/

1. Martin Lewis is not the arbiter of what is or is not effectively a tax.

2. Whether the graduate borrows money or not to fund their university course , there is no way the cost of repaying the loan is a graduate tax.

Not a lot to do with the Budget anyway.

Dod

1. Much more qualified to be so than most; he's been highlighting the misrepresentations and misunderstandings of the scheme since the beginning.

2. Well let's see ... a loan that is only repaid if/when you have earnings over a certain level, and is then repaid as a percentage of earnings above that threshold, irrespective of the amount of the loan. If it looks like a duck, swims like a duck, and quacks like a duck, then even if it isn't a duck, it's effectively one.

But if you don't like Martin Lewis (or some Lemons) as the arbiter of what is or is not effectively a tax, perhaps you'd prefer the Independent panel report to the Review of Post-18 Education and Funding, Presented to Parliament by the Secretary of State for Education:

"For conventional debt such as bank loans, mortgages and consumer credit, total balance and interest rates are central to a correct understanding of what will ultimately need to be repaid. The student finance system by contrast behaves quite differently for most borrowers, for whom it operates in effect as an additional tax on earnings for the length of the repayment period. This leads to a gulf between perception and reality, to a misalignment of concern about how much is owed and how much will in fact be repaid."

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/805127/Review_of_post_18_education_and_funding.pdf

But as you say, nowt to do with the budget.

[hiriskpaul]

No, I'm not saying what you suggest is a good idea.

But if you already have a big pension fund in 2015, it might be worth leaving the pension till last.

The pension is still IHT free after age 75.

You need to have the earnings to put 60k into a pension anyway.

Yes, our SIPPs are a major part of our IHT mitigation strategy. We have not been drawing for some time, living off taxable investments instead. We were quite prepared to pay a hefty age 75 LTA charge as this was still better for beneficiaries than paying IHT, but my beneficiaries have just received a very nice bonus.

The thing is though, with LTA charges gone, I now think it has become more likely that pension pots will eventually be made subject to IHT, so they may well end up worse off.

[AJC5001]

Martin Lewis: "Government student loan plans are a big increase to the cost of uni – it’s effectively a lifelong graduate tax for most."

https://www.moneysavingexpert.com/pressoffice/2022/02/martin-lewis---government-student-loan-plans-are-a-big-increase-/

1. Martin Lewis is not the arbiter of what is or is not effectively a tax.

2. Whether the graduate borrows money or not to fund their university course , there is no way the cost of repaying the loan is a graduate tax.

Not a lot to do with the Budget anyway.

Dod

1. Much more qualified to be so than most; he's been highlighting the misrepresentations and misunderstandings of the scheme since the beginning.

2. Well let's see ... a loan that is only repaid if/when you have earnings over a certain level, and is then repaid as a percentage of earnings above that threshold, irrespective of the amount of the loan. If it looks like a duck, swims like a duck, and quacks like a duck, then even if it isn't a duck, it's effectively one.

But if you don't like Martin Lewis (or some Lemons) as the arbiter of what is or is not effectively a tax, perhaps you'd prefer the Independent panel report to the Review of Post-18 Education and Funding, Presented to Parliament by the Secretary of State for Education:

"For conventional debt such as bank loans, mortgages and consumer credit, total balance and interest rates are central to a correct understanding of what will ultimately need to be repaid. The student finance system by contrast behaves quite differently for most borrowers, for whom it operates in effect as an additional tax on earnings for the length of the repayment period. This leads to a gulf between perception and reality, to a misalignment of concern about how much is owed and how much will in fact be repaid."

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/805127/Review_of_post_18_education_and_funding.pdf

But as you say, nowt to do with the budget.

Could one of you knowledgeable people tell me what happens if the 'student' never actually 'graduates'? Are they exempt from paying anything back - even if they get a salary above the relevant threshold?

If they don't graduate, how than they pay a 'graduate tax'

Adrian

[Lootman]

what happens if the 'student' never actually 'graduates'? Are they exempt from paying anything back - even if they get a salary above the relevant threshold?

If they don't graduate, how than they pay a 'graduate tax'

Or if they graduate and then promptly emigrate?

[ayshfm1]

[
Yes, our SIPPs are a major part of our IHT mitigation strategy. We have not been drawing for some time, living off taxable investments instead. We were quite prepared to pay a hefty age 75 LTA charge as this was still better for beneficiaries than paying IHT, but my beneficiaries have just received a very nice bonus.

The thing is though, with LTA charges gone, I now think it has become more likely that pension pots will eventually be made subject to IHT, so they may well end up worse off.

Quite agree

It is fricking stupid to have a pension provision that is incentivised to not be used as a pension, even with some mad tax limits wrapping it. Without any it's a forgone conclusion IMHO.

This is step in getting environment ready.

[mc2fool]

Could one of you knowledgeable people tell me what happens if the 'student' never actually 'graduates'? Are they exempt from paying anything back - even if they get a salary above the relevant threshold?

If they don't graduate, how than they pay a 'graduate tax'

It's only a graduate tax if they graduate. If they don't it's a drop-out tax.

[Lootman]

Yes, our SIPPs are a major part of our IHT mitigation strategy. We have not been drawing for some time, living off taxable investments instead. We were quite prepared to pay a hefty age 75 LTA charge as this was still better for beneficiaries than paying IHT, but my beneficiaries have just received a very nice bonus.

The thing is though, with LTA charges gone, I now think it has become more likely that pension pots will eventually be made subject to IHT, so they may well end up worse off.

Quite agree. It is fricking stupid to have a pension provision that is incentivised to not be used as a pension, even with some mad tax limits wrapping it. Without any it's a forgone conclusion IMHO.

This is step in getting environment ready.

But the risk is what Paul said. You can spend decades doing this kind of planning and then the government changes the rules. That is the whole problem with pension plans - it is hostage money, constantly tinkered with.

Likewise you can spend decades investing in qualifying AIM shares to avoid IHT, and then the government of the day disallows that exemption.

The best way to avoid IHT is have mobile, liquid assets and not assets that are tied down in long-term plans.

[1nvest]

No, I'm not saying what you suggest is a good idea.

But if you already have a big pension fund in 2015, it might be worth leaving the pension till last.

The pension is still IHT free after age 75.

You need to have the earnings to put 60k into a pension anyway.

Yes, our SIPPs are a major part of our IHT mitigation strategy. We have not been drawing for some time, living off taxable investments instead. We were quite prepared to pay a hefty age 75 LTA charge as this was still better for beneficiaries than paying IHT, but my beneficiaries have just received a very nice bonus.

The thing is though, with LTA charges gone, I now think it has become more likely that pension pots will eventually be made subject to IHT, so they may well end up worse off.

IIRC I read that SIPP can only be transferred to spouse/partner or children, and can't be drawn from under the age of 57 without incurring up to a 55% tax rate (or if drawn as a lump sum isn't exempt from IHT).

Gifting instead has risks, I believe reduces passing on a property IHT free, i.e. near £1M couples combined home value exemption but where any sizeable gifts made <7 year prior are discounted (considered first) from that property exemption allowance.

Changing dynamics/rules, instability/risk is a major reason why inward investment is inclined to be redirected elsewhere than the UK and more so now that the UK has a global reputation of revolving doors. As does its 17,000 pages tax rule book. Induces dark actions - such as booking a casino private room and handing over a £1M/whatever of chips after a coin-flip for the cameras game of chance. Or other such 'obscure' methods.

[1nvest]

The best way to avoid IHT is have mobile, liquid assets and not assets that are tied down in long-term plans.

US data ...

PV

PV

UK ETF equivalents/similar ... 3LUS 2MCL

Instead of cash on deposit (in effect lending to the bank), perhaps 95/5 hard cash/bitcoin (US$ are never withdrawn, remain spendable - only get withdrawn once they drop into a banks hands, unlike the UK where older notes expire).

[Tedx]

No, I'm not saying what you suggest is a good idea.

But if you already have a big pension fund in 2015, it might be worth leaving the pension till last.

The pension is still IHT free after age 75.

You need to have the earnings to put 60k into a pension anyway.

Yes, our SIPPs are a major part of our IHT mitigation strategy. We have not been drawing for some time, living off taxable investments instead. We were quite prepared to pay a hefty age 75 LTA charge as this was still better for beneficiaries than paying IHT, but my beneficiaries have just received a very nice bonus.

The thing is though, with LTA charges gone, I now think it has become more likely that pension pots will eventually be made subject to IHT, so they may well end up worse off.

IIRC I read that SIPP can only be transferred to spouse/partner or children, and can't be drawn from under the age of 57 without incurring up to a 55% tax rate (or if drawn as a lump sum isn't exempt from IHT).

Gifting instead has risks, I believe reduces passing on a property IHT free, i.e. near £1M couples combined home value exemption but where any sizeable gifts made <7 year prior are discounted (considered first) from that property exemption allowance.

Changing dynamics/rules, instability/risk is a major reason why inward investment is inclined to be redirected elsewhere than the UK and more so now that the UK has a global reputation of revolving doors. As does its 17,000 pages tax rule book. Induces dark actions - such as booking a casino private room and handing over a £1M/whatever of chips after a coin-flip for the cameras game of chance. Or other such 'obscure' methods.

Re: SIPPS.You're information is wrong

[AJC5001]

Yes, our SIPPs are a major part of our IHT mitigation strategy. We have not been drawing for some time, living off taxable investments instead. We were quite prepared to pay a hefty age 75 LTA charge as this was still better for beneficiaries than paying IHT, but my beneficiaries have just received a very nice bonus.

The thing is though, with LTA charges gone, I now think it has become more likely that pension pots will eventually be made subject to IHT, so they may well end up worse off.

Another advantage of having potential IHT-able funds in a SIPP is that, should one need to pay care fees in the future, the cash can still be withdrawn. I not needed, it remains IHT free.

Adrian

[1nvest]

No, I'm not saying what you suggest is a good idea.

But if you already have a big pension fund in 2015, it might be worth leaving the pension till last.

The pension is still IHT free after age 75.

You need to have the earnings to put 60k into a pension anyway.

Yes, our SIPPs are a major part of our IHT mitigation strategy. We have not been drawing for some time, living off taxable investments instead. We were quite prepared to pay a hefty age 75 LTA charge as this was still better for beneficiaries than paying IHT, but my beneficiaries have just received a very nice bonus.

The thing is though, with LTA charges gone, I now think it has become more likely that pension pots will eventually be made subject to IHT, so they may well end up worse off.

IIRC I read that SIPP can only be transferred to spouse/partner or children, and can't be drawn from under the age of 57 without incurring up to a 55% tax rate (or if drawn as a lump sum isn't exempt from IHT).

Gifting instead has risks, I believe reduces passing on a property IHT free, i.e. near £1M couples combined home value exemption but where any sizeable gifts made <7 year prior are discounted (considered first) from that property exemption allowance.

Changing dynamics/rules, instability/risk is a major reason why inward investment is inclined to be redirected elsewhere than the UK and more so now that the UK has a global reputation of revolving doors. As does its 17,000 pages tax rule book. Induces dark actions - such as booking a casino private room and handing over a £1M/whatever of chips after a coin-flip for the cameras game of chance. Or other such 'obscure' methods.

Re: SIPPS.You're information is wrong

K

Just so happen to have been searching and I think it was https://www.gov.uk/tax-on-pension-death-benefits and https://www.gov.uk/tax-on-pension/highe ... d-payments that I had previously read

[Dod101]

It is fricking stupid to have a pension provision that is incentivised to not be used as a pension, even with some mad tax limits wrapping it. Without any it's a forgone conclusion IMHO.

This is step in getting environment ready.

(sic)

It is not of course actively incentivised to be used as anything except as the means of obtaining a pension. As all will know it just happens to be a Self Invested Personal Pension and thus, surprise surprise, happens to fall within the pension rules and taxes.

Obviously the benefit of being able to pass it on at death, free of IHT, is of great benefit to many. Interesting is it not that instead of the general group of cohorts sharing in the benefit of an early death, the value is parcelled up, retained by the individual’s estate and passed on to his/her descendants thus depriving the ‘pool’ of pensioners of the benefit of the savings. I suppose someone has worked this through but I would imagine that we will see many more changes to the regime in the coming years.

Dod

[Mike4]

Clearly you have a very good crystal ball. How do you know that these were my circumstances? Actually in my day it was very unusual for young people from my background to go to university. I got the school qualifications to attend and was offered a place but felt that it was unfair all round so went off and found myself a job. Was it not your leftie PM, a guy called Tony Blair, that set up this nonsense in the first place? There is no requirement to attend university you know.

Dod

I also remember back in them days before Tony Blair was invented, students holding protest sit-ins at the LSE. Protests that their free grants were not enough to live on comfortably enough to meet their expectations.

But yes you're right, that nice Mr Blair was the one who decided 50% of the proletariat should go to university; at a stroke stoking up the tendency of people to confuse intelligence with edumacation.

Also, he was the one who started off the current obsession with everything in life having to be 'fair'. I've no idea why, as it just isn't and never will be.

Oh dear, what board is this again??

[tjh290633]

I also remember back in them days before Tony Blair was invented, students holding protest sit-ins at the LSE. Protests that their free grants were not enough to live on comfortably enough to meet their expectations.

But yes you're right, that nice Mr Blair was the one who decided 50% of the proletariat should go to university; at a stroke stoking up the tendency of people to confuse intelligence with edumacation.

Also, he was the one who started off the current obsession with everything in life having to be 'fair'. I've no idea why, as it just isn't and never will be.

Oh dear, what board is this again??

There were two factors affecting maintenance grants, parental income and location. Parents were supposed to contribute, but not all were able to make up the full amount. A friend had two siblings at university simultaneously. Very little prospect for him.

What most of us did was to do vacation work. Christmas Post, Reserve Service, bus conducting or driving, railway portering, etc. That helped pay for the alcohol consumed and socialising.

The one universal thing was free tuition, and I think it is a shame that this was done away with. Maintenance could be covered in many ways, of which work in various forms is far preferable to taking on debt.

TJH

[Mike4]

I also remember back in them days before Tony Blair was invented, students holding protest sit-ins at the LSE. Protests that their free grants were not enough to live on comfortably enough to meet their expectations.

But yes you're right, that nice Mr Blair was the one who decided 50% of the proletariat should go to university; at a stroke stoking up the tendency of people to confuse intelligence with edumacation.

Also, he was the one who started off the current obsession with everything in life having to be 'fair'. I've no idea why, as it just isn't and never will be.

Oh dear, what board is this again??

There were two factors affecting maintenance grants, parental income and location. Parents were supposed to contribute, but not all were able to make up the full amount. A friend had two siblings at university simultaneously. Very little prospect for him.

What most of us did was to do vacation work. Christmas Post, Reserve Service, bus conducting or driving, railway portering, etc. That helped pay for the alcohol consumed and socialising.

The one universal thing was free tuition, and I think it is a shame that this was done away with. Maintenance could be covered in many ways, of which work in various forms is far preferable to taking on debt.

TJH

You're right. On reflection I was denied a university education as my parents earned a shade over the limit you mention and student loans were not available, so I decided to get myself a job and earn some money.

Got fed up with that after about three years and five jobs, and packed it in. I've been self-unemployed ever since. Still not sure if its gonna work out!