My feeling is that the biggest change this will elicit is that well off people won't be as keen to lump big amounts into their pension. This could be as much as £60,000 a year with 40% or 45% of that being a cost to the exchequer in pension tax relief. - ThreadSky

glasgowifa.bsky.social • 182 days ago

My feeling is that the biggest change this will elicit is that well off people won't be as keen to lump big amounts into their pension. This could be as much as £60,000 a year with 40% or 45% of that being a cost to the exchequer in pension tax relief.

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lowcarbondave.bsky.social•126 days ago

40/45% tax relief is still attractive if your retirement plans is to draw 25% tax free (subject to the cap) and then pay 20% on income. And death before 75 is still good, albeit not as good as the pre 75 rules. Pensions are dead yet, but the post 75 rules with double taxation are dreadful.

glasgowifa.bsky.social•182 days ago

For people wanting to save into their pension and looking forward to a long and happy retirement, pension tax relief (and ISAs) remain suitable and generous ways to build up funds during your working life and plan for the future.

glasgowifa.bsky.social•182 days ago

Clearly IHT may also be a factor for people who do have large pension pots and haven't or will struggle to spend these funds. Like many IHT solutions, the most straightforward solutions will be spending or gifting during your life.

glasgowifa.bsky.social•182 days ago

Effectively an individual can gift £325k every 7 years without incurring tax charges. You can also make gifts from regular income without this counting as deprivation of assets.

glasgowifa.bsky.social•182 days ago

For healthy people, there is also the option of putting life cover in place. While this doesn't reduce an IHT bill, it will provide a means of paying the tax.

glasgowifa.bsky.social•182 days ago

With regards to gifting, people with IHT issues may be happier to make gifts now and increase the income being drawn from their pension. Like a lot of IHT solutions, doing things little and often can have a big impact rather than allowing years to pass.

glasgowifa.bsky.social•182 days ago

Big issue for making gifts from pensions is you would have to 1st remove it from the pension. This would be in the form of 25% tax free cash then the remaining 75% being taxable income. If you've drawn your 25% already, it will be expensive to lift a big chunk from your pension to gift.

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