Will the new Conservative government’s first Budget on 11 March abolish inheritance tax (IHT)? The Chancellor said in September that he was mulling significant reforms, but there were no firm proposals in the Conservatives’ election manifesto and he has gone quiet on the matter. The good news, however, is that the pension system now offers a golden opportunity to cut, or even wipe out, a potential liability. Since the pension freedom reforms of 2015, pensions have become a key inheritance-tax planning tool. 

This is primarily because, while pension assets bequeathed to your heirs have always been exempt from IHT in most circumstances, the reforms make it much easier to pass on such assets. You’re now entitled to pass on any unspent money in your pension fund – that is any cash you’ve not spent on an annuity or drawn down as income – to the beneficiaries of your choice. If you die before your 75th birthday, your beneficiaries will receive your pension fund with no tax implications at all.

There’s no IHT due and they can withdraw the money in one go or as regular income, with no income tax or capital-gains tax to pay. If you die after age 75, the rules are slightly different. Your beneficiaries will pay income tax at their marginal rate on money they take out of the fund, but there will still be no IHT to pay. 

The reforms make pensions really useful for families’ financial planning. You can pass pensions wealth down to your children, and they can pass it on to their own children if they choose not to use it. For these reasons, it makes sense for anyone worried about inheritance tax to consider making full use of pension saving. The more you shift into a pension plan – subject to rules on annual contributions and lifetime savings – the more you’ll be able to pass on with no inheritance-tax consequences. 

Do, however, check the terms of your pension. Some older plans include clauses requiring savers to buy an annuity or come with other conditions that reduce their effectiveness from an IHT perspective. Final-salary pension schemes also have less freedom in this regard.

Finally, it could be worth exploiting pensions to work around IHT in another way. You are entitled to set up pension plans for your children, paying in up to £3,600 of contributions a year including tax relief even for non-taxpayers. This can be a useful way to provide them with money and reduce the size of your estate for IHT purposes. 

Today’s National Day   

NATIONAL GET OVER IT DAY!  

PUBLISHERS NOTICE 

“HE JUST WON £1,460 IN
TWO DAYS!” 

  Dear Streetwise Customer, 

 “OMG, Ludlow 3:45…two horses to back. Bott N Brown WON at 25/1 !!! Average odds taken on Betfair exchange 80/1. I backed for £12 winning me £960. Can you please thank Bill for me.”

G.B – 6th February 2020

    “Many thanks. Thursday OMG Newcastle 5:30. Special Lady WON 50/1. Won £500. “

G B – 7th February 2020  

 A couple of weeks ago we wrote to you about The Hermes Strategy, a unique approach to horse racing created by Bill Burrows. I’ve reproduced word for word, two emails I received this week from
one of our customers who tried the strategy for the first time just a few days ago. 

He just won £1,460 in two days! 

Needless to say, he’s pleased!  

 Now we don’t get 80-1 and 50-1 winners every day (although it looks like we do at the moment!) but because this strategy looks at the whole thing from a VERY unusual angle, long odds winners come along pretty regularly alongside more mundane wins.

It all adds up to a great second income for anyone able to spend 7-10 minutes a day putting the strategy to work

For full details, take a look HERE 

You could very easily be up and running and copying Bill within a few hours of reading about this. Everything you need is at your fingertips.         

Best Wishes  

John Harrison 

www.streetwisenews.com/hermes