Good video Chris, I have already ceased any activity to significantly grow my small business and have stopped employing any new staff, and will be cutting back on my own work commitments to be in effect semi retired. I will then start to spend my pension savings on overseas travel, whilst increasing the regular gifts
Thank you. I will probably do a separate video, but I have got older videos covering bonds; th-cam.com/video/81owqIImGXo/w-d-xo.htmlsi=86p2AN4Wptq_7p1T and trusts; th-cam.com/video/10PWSsslQf4/w-d-xo.htmlsi=oNHKhRitNwT5RDH3. I hope these help.
Great video Chris, I will be retiring earlier to enjoy the fruits of my pension and will be giving away. Not sure this government have thought through this. Many highly skilled workers I know will be doing the same at 55 onwards. It does not make much financial sense to keep working and filling a pension pot any more.
Yes we're retiring around age 58 and will make some large lump sum gifts early on and then later on gifts out of excess income making sure we remain under the IHT threshold.
@@palmtree-e2l same. I’m 56 and looking to retire as soon as possible now. My job currently is very easy high paid home based so I’m just sitting it out for now. I currently pay about 2K a month income tax and NI on top and that will stop. Government have given me no incentive to work any more. I have a place in Spain and will be spending a lot more time there as well.
Thanks Chris. I too am one of the many that will be changing my pension strategy to avoid the IHT sledgehammer, and appreciate your thoughts on the options. Cheers!
Do we think when another government comes in it will all change again? Surely it will. If it’s still in place years down the line and I am fortunate enough to be affected, I think a move abroad would be on the cards.
Great video - summed everything up incredibly well. I think the government are mad to try and impose such a high tax on money that people have already paid into DC pensions as people will just go to extraordinary lengths to avoid paying it, and rightly so. In my view they would be better off imposing a 20% IHT tax on unspent pensions and close all loop holes. I personally wouldn’t object to a 20% tax on anything I haven’t spent but there is no way they are getting 81% of my hard earned cash!
Thank you. Yes there are so many other routes they could have gone, but we’re stuck with what we’ve got for now. As you say, people will find ways of avoiding paying the highest rates so it seems counterproductive.
Investing your pension pot into your child's future is actually a great idea! I have to congratulate you for thinking outside the box. Love your videos, man! 👍
If your estate already expects to pay IHT, then every pound earned from now is only worth 60p (simplistically). Every pound spent costs only 60p so everything you buy is cheaper. So immediately retire and spend down. Have great meals out with the family and friends. Eat and drink well, but stay healthy. Join a great gym. Have a lovely car and lavish holidays. You deserve it.
"Speed and pension admins." - It took my IFA over 9 months to get the info together on just 7 pensions I had, constant back and forth and one scheme took 5 months to release the required info!! All just so my IFA could begin to onboard me and start to plan a consolidaiton strategy. As my dad would say, "Two speeds that one, slow and stop!".
Falling GDP due to budget “These are the government’s figures you’d think they may have seen them”. (Said with irony). Helpdesk Rachel is a disaster! Good idea re paying into another pension for the kids, hadn’t even considered that one.
Perhaps put your money into gold, and bury it in the garden. It won't necessarily grow in value, but when your inheritors dig it up in the middle of the night (shhhh) after your demise, they can keep the lot, rather than being forced to hand over a big chunk to the state, who always want a piece of the action. And it's more straightforward than complex schemes which need lawyers and accountants to arrange.
Hi Chris, another great video as usual. The last strategy you suggest i.e. paying some of your unneeded pension into a pension for your son or daughter:- would they not be liable to tax on that as it's over the £3500 gift allowance?
I left work last year to slow down. I plan to completely retire next year. 2025 is the year of travel and working out where I want to be. It won’t be here . Enjoying what’s left is my priority, not trying to work out how I can be screwed over next regardless of the government in power. It’s really sad. I fear for my children and what they will have to go through it’s not good!
Exerlent video on saving tax. Well done, you r going express to Hevan after your life, because of the millions of pounds your have saved people though your wise tax advice
As interest in ISA's is deemed as income on the IHT403 form, is this another way of generating income to be able to gift as part of normal expenditure? My challenge is that I have a healthy ISA and Pension and was going to spend down the ISA first. I am now thinking of moving the ISA investments towards income to be able to gift that to my children and living of my pension (which is more than enough). Can you see a problem with this approach?
What is the situation with SSAS ? Does that also now come under IHT ? Maybe a video on this for business owners. I’m currently employed in PAYE but have property in business. So looking to use that as a vehicle to put money into.
Well they’ll probably have their own IHT concerns some day, but it’s still preferable that you avoid the tax. It would certainly be preferable to the kids themselves.
Wouldn’t it now make sense to taking pension into ISAs while remaining just below higher or additional rate to have it available for larger purchases or gifting.
@@Newmusicreview In terms of paying IHT? Well, many decide IHT avoidance is not really a priority. The same principles apply though if you still want to try and avoid the tax - the gifts out of income exemption isn’t restricted to only giving gifts to children.
It’s all to do with how someone’s estate value can affect their Residence Nil Rate Band… If someone’s estate for IHT purposes exceeds £2m, the RNRB starts to be reduced. It is reduced by £1 for every £2 over £2m. So someone with an estate of £2.35m will have no RNRB. So let’s say someone has a pension pot of £350,000 and other assets of £2m, they could find their effective IHT rate is 60% due to the loss of the RNRB. When the beneficiary takes the money out of the pension though, there is income tax for them to pay. An additional rate income taxpayer in England, Wales or Northern Ireland would pay 45%, and a Scottish resident would pay up to 48%. The result is that a Scottish beneficiary might only receive £29,906 additional cash from the £350,000 pension pot, which is an effective tax rate of 91.46%. An English, Welsh or Northern Irish beneficiary might only receive £36,787, which is an 89.49% overall tax rate.
How does HMRC calculate who pays for what from an expense perspective in a marriage? Is it 50:50. I have retired at 55 and started to draw my pension. My wife 53 and uses savings. If my wife covers half of our expenses then can I gift my excess to my sons?
There’s no more effective plan than spending money. It’s actually more difficult than it sounds though for a lot of people. You’ve got to spend it on things that don’t themselves hold any residual value (no point spending on nice watches and cars for example), and there’s only so much consumption one person can achieve. Apart from travelling in luxury more, which many people tend to tire of as they get older, it can be quite hard to get rid of cash!
Good video Chris, I have already ceased any activity to significantly grow my small business and have stopped employing any new staff, and will be cutting back on my own work commitments to be in effect semi retired. I will then start to spend my pension savings on overseas travel, whilst increasing the regular gifts
I don’t blame you! Thanks for watching.
I would love a deeper dive into offshore bonds and trusts please. Thank you for the video Chris 👍
Thank you. I will probably do a separate video, but I have got older videos covering bonds; th-cam.com/video/81owqIImGXo/w-d-xo.htmlsi=86p2AN4Wptq_7p1T and trusts; th-cam.com/video/10PWSsslQf4/w-d-xo.htmlsi=oNHKhRitNwT5RDH3. I hope these help.
Me too. thanks
Me too thanks
Great video Chris, I will be retiring earlier to enjoy the fruits of my pension and will be giving away. Not sure this government have thought through this. Many highly skilled workers I know will be doing the same at 55 onwards. It does not make much financial sense to keep working and filling a pension pot any more.
Thank you. I think it’s fairly certain that they haven’t thought it through!
Yes we're retiring around age 58 and will make some large lump sum gifts early on and then later on gifts out of excess income making sure we remain under the IHT threshold.
@@palmtree-e2l same. I’m 56 and looking to retire as soon as possible now. My job currently is very easy high paid home based so I’m just sitting it out for now. I currently pay about 2K a month income tax and NI on top and that will stop. Government have given me no incentive to work any more.
I have a place in Spain and will be spending a lot more time there as well.
Thanks Chris. I too am one of the many that will be changing my pension strategy to avoid the IHT sledgehammer, and appreciate your thoughts on the options.
Cheers!
You’re very welcome 👍🏼
Do we think when another government comes in it will all change again? Surely it will. If it’s still in place years down the line and I am fortunate enough to be affected, I think a move abroad would be on the cards.
Great video - summed everything up incredibly well. I think the government are mad to try and impose such a high tax on money that people have already paid into DC pensions as people will just go to extraordinary lengths to avoid paying it, and rightly so. In my view they would be better off imposing a 20% IHT tax on unspent pensions and close all loop holes. I personally wouldn’t object to a 20% tax on anything I haven’t spent but there is no way they are getting 81% of my hard earned cash!
Thank you. Yes there are so many other routes they could have gone, but we’re stuck with what we’ve got for now. As you say, people will find ways of avoiding paying the highest rates so it seems counterproductive.
Investing your pension pot into your child's future is actually a great idea! I have to congratulate you for thinking outside the box. Love your videos, man! 👍
No worries thanks for watching!
If your estate already expects to pay IHT, then every pound earned from now is only worth 60p (simplistically). Every pound spent costs only 60p so everything you buy is cheaper. So immediately retire and spend down. Have great meals out with the family and friends. Eat and drink well, but stay healthy. Join a great gym. Have a lovely car and lavish holidays. You deserve it.
Spend down and draw down
The new words we will be using a lot more
📣 Everyone on TH-cam pay attention! Chris is doing an IHT video 📣 👍👍
Haha spread the word 😉
"Speed and pension admins." - It took my IFA over 9 months to get the info together on just 7 pensions I had, constant back and forth and one scheme took 5 months to release the required info!! All just so my IFA could begin to onboard me and start to plan a consolidaiton strategy. As my dad would say, "Two speeds that one, slow and stop!".
Falling GDP due to budget “These are the government’s figures you’d think they may have seen them”. (Said with irony).
Helpdesk Rachel is a disaster!
Good idea re paying into another pension for the kids, hadn’t even considered that one.
Glad it’s helpful!
Perhaps put your money into gold, and bury it in the garden. It won't necessarily grow in value, but when your inheritors dig it up in the middle of the night (shhhh) after your demise, they can keep the lot, rather than being forced to hand over a big chunk to the state, who always want a piece of the action. And it's more straightforward than complex schemes which need lawyers and accountants to arrange.
Great advice Chris. Love the channel..
Thank you! Thanks for supporting it.
Hi Chris, another great video as usual. The last strategy you suggest i.e. paying some of your unneeded pension into a pension for your son or daughter:- would they not be liable to tax on that as it's over the £3500 gift allowance?
I left work last year to slow down. I plan to completely retire next year. 2025 is the year of travel and working out where I want to be. It won’t be here . Enjoying what’s left is my priority, not trying to work out how I can be screwed over next regardless of the government in power. It’s really sad. I fear for my children and what they will have to go through it’s not good!
Exemplary information as always Chris, 100%....!!
Thank you 🙏
Happy New Year Chris !
Great Vid very interesting it’s a mine field !
Atb Graham
HNY Graham. Glad you enjoyed the video 👍🏼
Super helpful vid BTW :)
Exerlent video on saving tax. Well done, you r going express to Hevan after your life, because of the millions of pounds your have saved people though your wise tax advice
I certainly hope so! 😇
Thanks Chris thanks for the excellent content
My pleasure. Thanks for watching.
Explain offshore bonds please
My parents have 1 and don’t understand it. Setup 16years ago and don’t understand it then or now. Too scared to ask or do anything about it.
It took 12 months for my Dads estate to be wound up and completed . And that was with a will.
Yes, that is quite typical. These changes certainly won’t help matters.
Nice 1 chris
No worries thanks for watching
As interest in ISA's is deemed as income on the IHT403 form, is this another way of generating income to be able to gift as part of normal expenditure? My challenge is that I have a healthy ISA and Pension and was going to spend down the ISA first. I am now thinking of moving the ISA investments towards income to be able to gift that to my children and living of my pension (which is more than enough). Can you see a problem with this approach?
I think that for the ISA to be utilised for the gifts out of income exemption you would only be able to give natural income such as dividends away.
Hi Chris, I presume that the £16k net gift out of pension is a PET?
Not if using the gifts out of surplus income exemption explained elsewhere in the video.
Excellent video Chris. Can you clarify about those that are in a Civil Partnership as opposed to Married in terms of IHT avoidance?
Equally advantageous for IHT mitigation
Thank you! Yes, civil partnership would offer the same advantages.
The only hope is they still have 2 years to re-evaluate and re-jig this idea to make it " fairer ".
What is the situation with SSAS ? Does that also now come under IHT ? Maybe a video on this for business owners. I’m currently employed in PAYE but have property in business. So looking to use that as a vehicle to put money into.
Yes SSAS assets will form part of IHT calculation from April 2027 too.
Chris, you mentioned about paying into a pension for son/daughter, does it have to be direct descendant or can it be niece / nephew ? Many thanks
No it can be anyone as long as you’re making the payments out of surplus income.
By moving it to your kids pension are you not just moving the problem down the chain?
Well they’ll probably have their own IHT concerns some day, but it’s still preferable that you avoid the tax. It would certainly be preferable to the kids themselves.
Wouldn’t it now make sense to taking pension into ISAs while remaining just below higher or additional rate to have it available for larger purchases or gifting.
You would probably pay less income tax on the withdrawals, yes.
What about the child free couples ?
@@Newmusicreview In terms of paying IHT? Well, many decide IHT avoidance is not really a priority. The same principles apply though if you still want to try and avoid the tax - the gifts out of income exemption isn’t restricted to only giving gifts to children.
Please explain the 89%. Thanks!
It’s all to do with how someone’s estate value can affect their Residence Nil Rate Band… If someone’s estate for IHT purposes exceeds £2m, the RNRB starts to be reduced. It is reduced by £1 for every £2 over £2m. So someone with an estate of £2.35m will have no RNRB.
So let’s say someone has a pension pot of £350,000 and other assets of £2m, they could find their effective IHT rate is 60% due to the loss of the RNRB.
When the beneficiary takes the money out of the pension though, there is income tax for them to pay. An additional rate income taxpayer in England, Wales or Northern Ireland would pay 45%, and a Scottish resident would pay up to 48%.
The result is that a Scottish beneficiary might only receive £29,906 additional cash from the £350,000 pension pot, which is an effective tax rate of 91.46%. An English, Welsh or Northern Irish beneficiary might only receive £36,787, which is an 89.49% overall tax rate.
@ that’s shocking
How does HMRC calculate who pays for what from an expense perspective in a marriage? Is it 50:50. I have retired at 55 and started to draw my pension. My wife 53 and uses savings. If my wife covers half of our expenses then can I gift my excess to my sons?
I think if you keep records to show you each cover 50% of expenses, you can gift your own excess income. Good record keeping is key though.
It's very simple. Leave the UK as soon as you can to a country that doesn't have IHT, while you're still allowed to do so. Problem solved!
Yeah saw this train coming now in Portugal for 2 years ..
I think the government should all be made to read the richest man in Babylon and most folk should read Die with Zero.
89% is mad...
It’s absolutely bonkers
Why do you have so many Privare Videos?
@@BrianCripps Videos are set to private when they’re no longer relevant or the data is out of date.
‘Just spend it…” if people do, that’ll suit the economy too, bringing forward that spending now will help the overall economy.
There’s no more effective plan than spending money. It’s actually more difficult than it sounds though for a lot of people. You’ve got to spend it on things that don’t themselves hold any residual value (no point spending on nice watches and cars for example), and there’s only so much consumption one person can achieve. Apart from travelling in luxury more, which many people tend to tire of as they get older, it can be quite hard to get rid of cash!