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[Misc] Retirement









Tim Over Whelmed

Well-known member
NSC Patron
Jul 24, 2007
10,610
Arundel
This thread is depressing for a number of us not nearing retirement.
Ah, good point, bloody good for those of us that are mate. In 1 hour and 45 minutes I’m heading to Gatwick and around 11 a.m. I’ll be in Marrakech. Sorry, I’m not helping am I 😉
 


Mancgull

Well-known member
Nov 28, 2011
5,510
Astley, Manchester
That’s going to change from 2027. As pensions are now within the framework of IHT, the pension will be income tax free to the beneficiary ( even after age 75) so there is no element of double taxation.
Just heard that in fact what I said about income tax on inherited pensions is not right. The income tax rules will likely remain. So a form of double taxation.
 






A mex eyecan

Well-known member
Nov 3, 2011
3,802
Seems to have been some confusion over this point but it appears that you are right and there will be IHT and income tax.
Looks like it will be taxed at 40% IHT and then recipients tax band so if they’re on 40% tax that would equate to the pension being taxed at a whopping 64%!!!
Im not sure though when it’s payable. When I croak it does it get taxed before it’s left to Mrs A or does it still transfer to her tax free and then what ever is left is taxed at time of her death?
 










sparkie

Well-known member
Jul 17, 2003
13,211
Hove
Not sure I'll be affording many big trips when I retire but perhaps 1 intercontinental travel episode and then a small number of euro escapes before giving up flying ( euro tunnel ok ). That's all about 10-15 years away though.
 


Shropshire Seagull

Well-known member
Nov 5, 2004
8,756
Telford
Looks like it will be taxed at 40% IHT and then recipients tax band so if they’re on 40% tax that would equate to the pension being taxed at a whopping 64%!!!
Im not sure though when it’s payable. When I croak it does it get taxed before it’s left to Mrs A or does it still transfer to her tax free and then what ever is left is taxed at time of her death?
My understanding. No IHT to spouse. So she will get all your SIPP (or other defined contribution pot) free of IHT but any drawdown will be at her marginal rate but can still enjoy 25% free of tax. Only when she dies will the IHT kick in.

Happy to be corrected ...
 






Driver8

On the road...
NSC Patron
Jul 31, 2005
16,178
North Wales
My understanding. No IHT to spouse. So she will get all your SIPP (or other defined contribution pot) free of IHT but any drawdown will be at her marginal rate but can still enjoy 25% free of tax. Only when she dies will the IHT kick in.

Happy to be corrected ...
Partly right. The is no IHT between spouses. If death is before age 75 there is no income tax on withdrawals, after 75 any withdrawals are taxed at marginal rate of surviving spouse. The 25% tax free cash can only be taken by the original spouse so if it hadn’t been taken by age 75 (unlikely) it would be lost.
 


Wes Tupper

Active member
Feb 27, 2024
105
My understanding. No IHT to spouse. So she will get all your SIPP (or other defined contribution pot) free of IHT but any drawdown will be at her marginal rate but can still enjoy 25% free of tax. Only when she dies will the IHT kick in.

Happy to be corrected ...
I would have thought that on the first death the value of the SIPP would be paid to the spouse, as cash, and is no longer treated as a pension. The spouse can then do whatever they want to with that cash, but whatever they do will form part of their estate for inheritance tax purposes when the spouse dies.
 




Daddies_Sauce

Falmer WSL, not a JCL
Jun 27, 2008
878
My understanding, reading the consultation (and I could still not have this correct) is that for your spouse or civil partner as now, should you pass before 75 yrs, no IHT or tax is due, they can take the lot tax free, post 75 yrs, then they will be taxed at their relevant band, but still no IHT.

Other beneficiaries will need to pay IHT and they will be taxed at their relevant band, IHT needs to be settled prior to the distribution of remaining monies by the pensions provider (so post probate?).

Pensions were designed for you to be able to support you in retirement, anything remaining on your passing could then be left to your beneficiaries. Seems fair to me that any remining monies paid to beneficiaries should be subject to tax, it was not taxed going into the pension so tax it when taking it out. The double taxing by IHT and income tax seems a little unfair.
 


Professor Plum

Well-known member
NSC Patron
Jul 27, 2024
532
Thank you, and noted 👍 Really excited it’s so much more than two weeks in Majorca, pushing us outside our comfort zone but creating some great memories and, I hope, a stepping stone for more adventures!
I spent 6 months travelling round India as a budget backpacker back in the early 1980s. It remains the most extraordinary country I’ve experienced and frankly, quite an ordeal at times. Certainly character-building on a large scale. But if you’re going as a relatively wealthy tourist and staying in nice hotels it’s probably a very different experience. It will be an amazing trip, I’m sure.
 


Professor Plum

Well-known member
NSC Patron
Jul 27, 2024
532
Well of course you should talk about retirement, but instead of sharing amazing holiday plans, can't you just say it's crap, you're bored and you wish you were still working?
Retirement is f***ing fantastic, especially the first 10 years or so as most people have all three sides of the ‘golden triangle’ intact — money, time, and good health. For most of our lives we have just 2 out of the 3 available. Depends what age you retire but generally 65-75 can be like one long glorious holiday. I’m 67 so I hope I have at least another 8-10 years at least to enjoy it.
 






Triggaaar

Well-known member
Oct 24, 2005
52,823
Goldstone
Retirement is f***ing fantastic, especially the first 10 years or so as most people have all three sides of the ‘golden triangle’ intact — money, time, and good health. For most of our lives we have just 2 out of the 3 available. Depends what age you retire but generally 65-75 can be like one long glorious holiday. I’m 67 so I hope I have at least another 8-10 years at least to enjoy it.

Sounds lovely. I'm trying to work out how much I need in a pension pot. They're moving the age from 67 to 68, but ain't no way I'm waiting that long.
 


PeterOut

Well-known member
Aug 16, 2016
1,243
After the budget, and the news of IHT (and tax) on Pensions (SIPPs) left for beneficiaries, how many of us retired are starting to re-think our estate and pensions plans? (assuming I last past 2027!).
What is this 'inheritance' that you speak of?
If you are fortunate enough to live long enough into old age to need residential care of some kind at the end of your life, current fees are in the region of £2K per week.
£100K per year!
Given my circumstances, inheritance tax is simply not on my radar. I do not anticpate being able to leave my house to my kids, as much as I would want to. I anticipate that any 'estate' that I may have will simply be handed over to some company or other that will pay minimum wage to the fabulous people who provide care in such places. Hopefully the value of my house will cover the fees for a short while.
Sadly, some American corporation will likely get the benefits of my life's work, my kids will get nowt. Unless I get a plane to Switzerland, of course...

Sorry if the above sounds really down - I am just livid at the number of people who I know who have had to move into care homes, and the financial impact that it is having on them and their kids. Rant over.
 


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