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Treacodactyl
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 25795
Location: Jumping on the bandwagon of opportunism

Posted: Thu Apr 06, 06 8:23 am Post subject: Happy A-Day
From today pensions should be much simpler and more flexible for people to save. Some more details are here: https://news.bbc.co.uk/1/hi/business/4879586.stm and https://news.bbc.co.uk/1/hi/business/4854622.stm

marigold

Joined: 02 Sep 2005
Posts: 12458
Location: West Sussex

Posted: Thu Apr 06, 06 8:56 am Post subject:
Or, to put it another way, the government has just given another big fat tax-break to the wealthy https://money.guardian.co.uk/aday/story/0,,1748051,00.html

sean
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 42219
Location: North Devon

Posted: Thu Apr 06, 06 11:13 am Post subject:
Given the total balls-up that's been made of pensions in the last few years this doesn't exactly fill me with confidence anyway. Our theory is that were better off using any spare pension money to buy extra years in Mandy's end-salary pension than doing anything else.

Andy B

Joined: 12 Jan 2005
Posts: 3920
Location: Brum

Posted: Thu Apr 06, 06 11:17 am Post subject:
This country has allways been run by the rich, for the rich. Nowt will change! Last edited by Andy B on Thu Apr 06, 06 11:22 am; edited 1 time in total

Behemoth

Joined: 01 Dec 2004
Posts: 19023
Location: Leeds

Posted: Thu Apr 06, 06 11:19 am Post subject:
Be careful if you do that and check the details - we looked into it and found that the 'extra years' were contracted out to an established pension provider and subject to the whims and vaguaries of any other private investment and there were better deals to be had elsewhere.

Treacodactyl
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 25795
Location: Jumping on the bandwagon of opportunism

Posted: Thu Apr 06, 06 11:21 am Post subject:
The theory of making them simpler should reduce charges for everyone over time. The rules can be used by all, not just the rich, and they would have been useful when I was paying into a pension when I just started work.

sean
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 42219
Location: North Devon

Posted: Thu Apr 06, 06 11:21 am Post subject:
Since we don't have any spare money at the moment it's academic anyway. Obviously if we're in a position to do something we'll check it out more closely.

Penny Outskirts

Joined: 18 Sep 2005
Posts: 23385
Location: Planet, not on the....

Posted: Thu Apr 06, 06 11:33 am Post subject:

Penisons have always been a dogs dinner. When I used to do financial services stuff - pensions were always the most complicated. If the professionals have problems learning it, what hope do the consumers have of understanding it?

There seems little incentive at present for poorer people to save, as part of the state pension is means tested, so if you've been saving all your life, you could potentially end up with the same net amount as someone who has done nothing.

Treacodactyl
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 25795
Location: Jumping on the bandwagon of opportunism

Posted: Thu Apr 06, 06 11:58 am Post subject:

Penny wrote:

There seems little incentive at present for poorer people to save, as part of the state pension is means tested, so if you've been saving all your life, you could potentially end up with the same net amount as someone who has done nothing.

Lets hope the government, well Mr Brown, starts to take note of all the reports it's commissioned. There seems to be overwhelming support for providing non-means-tested flat-rate pensions. Of course raising the state pension age will be necessary but as long as you can take private pensions sooner then that would make a much fairer system. If you wish to save you can retire earlier, if not then you have to work until you're older.

dougal

Joined: 15 Jan 2005
Posts: 7184
Location: South Kent

Posted: Thu Apr 06, 06 12:09 pm Post subject:

A little-noted (outside the Financial Services industry) Budget provision for the taxation of Trusts looks as though it could have major ramifications for the common practice of writing Life Insurance policies "in Trust".
This has in the past meant that life insurance payouts did not go into the estate of a deceased person and so escaped Inheritance Tax.
The cat is currently among those pidgeons.
It would be worthwhile checking whether or not any Life policies that could affect you (as insured or potential trust beneficiary) are done in this form.

This one came out of the blue, with effectively immediate impact, and could be a real surprise biggie...

Penny Outskirts

Joined: 18 Sep 2005
Posts: 23385
Location: Planet, not on the....

Posted: Thu Apr 06, 06 12:18 pm Post subject:

dougal wrote:

Blimey - missed that one

That is a real biggy - will it be applied retrospectively do you know? In other words, if you already have a life policy in trust for that very reason, does that now mean it will form part of the estate???? If so, this will move tons more people into inheritance tax, probably without knwoing, unless they have a good IFA. I can't see Lloyds (who ours is with) running to tell us!!

I might shock them and ring to ask!

Behemoth

Joined: 01 Dec 2004
Posts: 19023
Location: Leeds

Posted: Thu Apr 06, 06 12:29 pm Post subject:
It will apply from now on when the claim is paid, so get amending if necesary.

Treacodactyl
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 25795
Location: Jumping on the bandwagon of opportunism

Posted: Fri Apr 07, 06 6:05 am Post subject:

dougal wrote:

Do you have a link for that? I know a fair bit has changed around IHT and trusts but can't find anything about life insurance. I know full details will be in the finance bill published today.

Penny Outskirts

Joined: 18 Sep 2005
Posts: 23385
Location: Planet, not on the....

Posted: Fri Apr 07, 06 8:57 am Post subject:

Treacodactyl wrote:

dougal wrote:

Do you have a link for that? I know a fair bit has changed around IHT and trusts but can't find anything about life insurance. I know full details will be in the finance bill published today.

They were talking about it on Radio 5 yesterday - a finance bill is coming out today - if I understood correctly, that will clarify things.

dougal

Joined: 15 Jan 2005
Posts: 7184
Location: South Kent

Posted: Fri Apr 07, 06 9:58 am Post subject:

Treacodactyl wrote:

dougal wrote:

Do you have a link for that? I know a fair bit has changed around IHT and trusts but can't find anything about life insurance. I know full details will be in the finance bill published today.

Well there was this from the FT:

The Financial Times wrote:

Tax on trusts set to affect �millions of wills�
By Lucy Warwick-Ching
Published: April 4 2006 22:22 | Last updated: April 4 2006 22:22

Lawyers have stopped writing wills and leading insurers have frozen sales of many life policies as a powerful alliance of professional bodies fights to overturn Gordon Brown�s Budget proposals to alter the tax treatment of some trusts.

Professional bodies claim the proposed changes will affect millions of wills and insurance policies.

Mr Brown�s surprise decision to levy tax on commonly-used trusts has prompted emergency meetings between professional bodies and the government in a last-ditch attempt to prevent the rules being introduced in this Friday�s Finance Bill.

Prudential is one of a number of insurers to have stopped writing new trust business, while Standard Life and Scottish Widows have both said they were considering their position amid fears that thousands of their customers could fall foul of the new tax rules.

The Society of Trusts and Estate Practitioners has urged its professional members to stop writing wills in the light of the tax changes and has told them to contact more than 1m people to review their existing wills.

Experts have described the chancellor�s proposals as the most sweeping changes to trust law in a generation. Kevin Martin, president of the Law Society, said: �This measure will affect millions of ordinary people and not just the very wealthy that the government claims to be targeting.� He urged the government to rethink the �rushed� measures and engage in proper consultation.

The Law Society, Society of Trust and Estate Practitioners, Chartered Institute of Taxation, Institute of Chartered Accountants in England and Wales, Association of Chartered Certified Accountants and the Association of Private Client Investment Managers have joined forces to urge that the budget changes be postponed until there has been wider consultation.

The moves follow Mr Brown�s revelation in the Budget that from 2008 many trusts will be hit with a 6 per cent charge every 10 years. The clampdown is aimed at �accumulation and maintenance� trusts, often used for school fees planning, as well as �interest in possession� trusts, which are used to pass wealth between generations.

The government claims the measures will affect only a �tiny fraction of the wealthiest top 1 per cent of the population.� But lawyers and trust planners argue the measures will be far broader than anticipated. The Association of British Insurers has written to the HM Revenue & Customs to protest that �millions� of people will be caught out.

The Treasury sought to play down the impact of the new tax measures. A spokesman said: �We do not think the measures will affect a large number of the population. But we understand that the industry wants clarification of the measure so we will have technical experts at all the meetings this week.�

It said the Finance Bill would set out exactly how the new rules will work on Friday.

https://news.ft.com/cms/s/6934a1f6-c410-11da-bc52-0000779e2340.html

No way to run a railroad?

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