UK Budget

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JAFO
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UK Budget

Post by JAFO »

Can we discuss the budget non politically. I just want to confirm a technical point.
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Re: UK Budget

Post by Bahnstormer_vRS »

Yes, although wouldn't you be better getting advice from your Independent Financial Advisor?

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Re: UK Budget

Post by RichM »

If it's the price of a pint, or maybe, the price of a watch I'm in (non politically)!
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Re: UK Budget

Post by jtc »

1 in 700 pints are free!
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nbg
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Re: UK Budget

Post by nbg »

JAFO wrote: Wed Oct 30, 2024 6:52 pm Can we discuss the budget non politically. I just want to confirm a technical point.
You could ask, but how will you know if the person who responds knows what they are talking about? :)

Neil
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Re: UK Budget

Post by JAFO »

nbg wrote: Wed Oct 30, 2024 7:22 pm
JAFO wrote: Wed Oct 30, 2024 6:52 pm Can we discuss the budget non politically. I just want to confirm a technical point.
You could ask, but how will you know if the person who responds knows what they are talking about? :)

Neil
It might have been a different forum, but I thought someone had mentioned a certain expertise in this area previously. :D
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Re: UK Budget

Post by RichM »

jtc wrote: Wed Oct 30, 2024 7:21 pm 1 in 700 pints are free!
So for me, that's a free pint about every 2 years then! I'll drink to that! Or drown my sorrows, I haven't worked out which yet! (Non political, see!)
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Re: UK Budget

Post by JAFO »

Regarding pints. I thought they lowered duty by 1.7%. I thought given a price of £6.00 a pint, this would be about 10p a pint.

Was she implying here's only 60p duty in a pint, so 1.7% is 1p?
It would be less actually because there's VAT on the duty as well.

(Edit. I just checked, and the duty on 5% lager is about 54p per pint, so the change is about 1p including VAT)
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Re: UK Budget

Post by JAFO »

I have found the answer to my question now.

I had wondered about the tax position on personal pension pots after the budget. Previously they haven't been counted for IHT purposes. Now they will be in a couple of years time. When you take the money out you have always had to pay income tax on the money as you take it out. I wondered if paying the IHT replaced the income tax, but it's in addition.

So if you have a pension pot worth £1m, assuming it's all taxable, it would cost you 400k in IHT, and will still cost at least 200k in income tax over time making at least 600k tax on that pension pot.
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Re: UK Budget

Post by nbg »

JAFO wrote: Sat Nov 02, 2024 11:11 am I have found the answer to my question now.

I had wondered about the tax position on personal pension pots after the budget. Previously they haven't been counted for IHT purposes. Now they will be in a couple of years time. When you take the money out you have always had to pay income tax on the money as you take it out. I wondered if paying the IHT replaced the income tax, but it's in addition.

So if you have a pension pot worth £1m, assuming it's all taxable, it would cost you 400k in IHT, and will still cost at least 200k in income tax over time making at least 600k tax on that pension pot.
HMRC document here…
https://www.gov.uk/government/consultat ... nd-payment

And no it may not cost you at least £200k in IT over time! It could equally cost zero (if drawn by a non taxpayer) and the maximum would be £270k (if all taxed at 45%).

They are also completely separate aspects…

1). The IHT liability of the estate - an asset taxed like other assets.
2). The IT liability of the person who has inherited an asset that allows income to be drawn - income taxed according to the rules for that income source.

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Re: UK Budget

Post by exHowfener »

1 in 700 pints are free!
Perhaps you should vote with your feet, (see what I did there) and drink in a less expensive pub?

Beer prices will not go down.
I started out with nothing and I still have most of it left
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Re: UK Budget

Post by Timishere »

JAFO wrote: Sat Nov 02, 2024 11:11 am I have found the answer to my question now.

I had wondered about the tax position on personal pension pots after the budget. Previously they haven't been counted for IHT purposes. Now they will be in a couple of years time. When you take the money out you have always had to pay income tax on the money as you take it out. I wondered if paying the IHT replaced the income tax, but it's in addition.

So if you have a pension pot worth £1m, assuming it's all taxable, it would cost you 400k in IHT, and will still cost at least 200k in income tax over time making at least 600k tax on that pension pot.
IHT is one of the more complex pieces of legislation, as is pension topics (eg you might be able to apply for certain types of tax protection - have a look at that), and you might also need to be thinking about lifetime allowance. I'm generally a bit underwhelmed by the IFAs I've spoken with but in this case it's almost certainly worth finding a specialist who can help if your pot (or DB equivalent) is approaching those levels, for example I believe there is still an exemption for regular gifting from income that avoids the 7 year IHT rule that might work quite nicely if you annuitise some of the funds.
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Re: UK Budget

Post by tikkathree »

RichM wrote: Wed Oct 30, 2024 7:53 pm
jtc wrote: Wed Oct 30, 2024 7:21 pm 1 in 700 pints are free!
So for me, that's a free pint about every 2 years then! I'll drink to that! Or drown my sorrows, I haven't worked out which yet! (Non political, see!)
I can't drink alcohol, can I take my bit as cash then? :lol:
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Re: UK Budget

Post by JAFO »

@nbg @Timishere

Thanks for your thoughts and links. I think I will have some funds appearing unexpectedly for some watch purchases. The BC Classic looks even more attractive even without modifications. :D
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Re: UK Budget

Post by Bahnstormer_vRS »

Just sharing comment from the holder of one of my Pension funds on the subject, received by email a few hours post budget;-

Pensions become subject to inheritance tax

From April 2027, defined contribution pension pots will be subject to inheritance tax at the death of the holder. Under current rules, pension funds are not counted as part of your estate for IHT purposes, so you could pay up to £1,073,100 to your beneficiaries as a lump sum tax free. Currently, only 6% of households pay IHT, but this rule change will increase that number.

The Chancellor also opted to freeze the nil-rate band at £325,000, which is the amount you can pass on before it becomes subject to IHT, and the residence nil-rate band at £175,000, which is the value of a property you can pass to your direct descendants without paying tax. Today’s Budget doesn’t change the spousal exemption from IHT, and spouses can still pass unused allowances to their partner, meaning a possible total of £1m can be passed on by a married couple tax-free.

There were a number of changes to pensions rumoured ahead of the Budget which didn’t happen, including a reduction (or scrappage) of the pension commencement lump sum, tax-free cash allowance or pension contribution relief.



I won't offer a comment; make what you will of it. :wink: :wink:

Guy
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