Exceeding lifetime pension allowance
Discussion
Cheib said:
One of my reasons for wanting to leave my pension intact is that it falls outside your estate for IHT purposes.
williaa68 said:
Cheib said:
One of my reasons for wanting to leave my pension intact is that it falls outside your estate for IHT purposes.
I’d definitely contemplate moving abroad once my kids are older to a cheaper place to live and somewhere where IHT doesn’t exist. I have paid a huge amount of tax during my working life and would rather my children got as much as possible when my wife and I are gone ! When I am 60 my kids will just be University age....at that point I can see me making a decision to live in another country. I love living in the UK but neither my wife nor I have massive amounts of family ties.
Cheib said:
One of my reasons for wanting to leave my pension intact is that it falls outside your estate for IHT purposes.
You may have seen that King Boris has all of this under review.The current system is bonkers - where wealthy people spend their general funds first, their ISAs second and their pensions last. If you're planning to keep ahead of the taxman you may need to export yourself before 11 March 2020 (Budget day).
Similarly there may be a real risk that King Boris will introduce Lifetime IHT. It's incredibly easy to introduce and has existed in the past. In some unusual circumstances it already exists today - at a rate of 20%. At the moment IHT is a "voluntary tax". You can completely avoid it simply by giving stuff away.
On the pensions front it's been on the cards for years that tax relief could be cut to basic rate only (20% for everyone).
government needs to rapidly alter lifetime and annual allowance a is killing off senior gp's and consultants as being told retire or go part time by accountants/financial advisers to avoid tax bills which you are unaware of till after deadline due to pensions lagging years behind tax paid
this is even hitting doctors in mid 40's so no incentive to stay till pension age!
this is even hitting doctors in mid 40's so no incentive to stay till pension age!
p1doc said:
government needs to rapidly alter lifetime and annual allowance a is killing off senior gp's and consultants as being told retire or go part time by accountants/financial advisers to avoid tax bills which you are unaware of till after deadline due to pensions lagging years behind tax paid
this is even hitting doctors in mid 40's so no incentive to stay till pension age!
That simply demonstrates that doctors are grossly overpaid and/or their pension arrangements are far too generous (thanks Tony Blair). A good first step would be to cut their pay by at least a third.this is even hitting doctors in mid 40's so no incentive to stay till pension age!
This may help to explain the situation and the possible solution. Apologies for the foreshortened layout.
Budget 2020: pensions changes
expected
The next Budget will take place on 11 March
2020. The Government is expected to
announce its solution to the headline-
grabbing pensions tax problem that is
causing NHS clinicians to reduce their
workloads.
In a nutshell, the problem stems from the
tapered annual allowance. This reduces an
individual's annual allowance (currently
£40,000) for those with a threshold income
over £110,000 by £1 for every £2 of adjusted
income over £150,000. When calculating
adjusted income, the value of pension
savings and non-pensionable pay has to be
taken into account. This can result in a high
earner's annual allowance being reduced to
£10,000. NHS staff who are not able to predict their
income, for example due to on-call duties and
overtime, have found themselves
inadvertently breaching the tapered annual
allowance and facing a large tax bill as a
result.
At the end of last year, the Government
suggested a temporary solution for the
problem in order to keep senior doctors
working. It also promised that a permanent
solution would be in place by the beginning of
the next tax year.
The details are expected to be announced in
the Budget and any solution is likely to apply
across the board, not just to the NHS.
According to the Times, the Treasury is
considering raising the threshold income to
£150,000.
Budget 2020: pensions changes
expected
The next Budget will take place on 11 March
2020. The Government is expected to
announce its solution to the headline-
grabbing pensions tax problem that is
causing NHS clinicians to reduce their
workloads.
In a nutshell, the problem stems from the
tapered annual allowance. This reduces an
individual's annual allowance (currently
£40,000) for those with a threshold income
over £110,000 by £1 for every £2 of adjusted
income over £150,000. When calculating
adjusted income, the value of pension
savings and non-pensionable pay has to be
taken into account. This can result in a high
earner's annual allowance being reduced to
£10,000. NHS staff who are not able to predict their
income, for example due to on-call duties and
overtime, have found themselves
inadvertently breaching the tapered annual
allowance and facing a large tax bill as a
result.
At the end of last year, the Government
suggested a temporary solution for the
problem in order to keep senior doctors
working. It also promised that a permanent
solution would be in place by the beginning of
the next tax year.
The details are expected to be announced in
the Budget and any solution is likely to apply
across the board, not just to the NHS.
According to the Times, the Treasury is
considering raising the threshold income to
£150,000.
rockin said:
Cheib said:
One of my reasons for wanting to leave my pension intact is that it falls outside your estate for IHT purposes.
You may have seen that King Boris has all of this under review.The current system is bonkers - where wealthy people spend their general funds first, their ISAs second and their pensions last. If you're planning to keep ahead of the taxman you may need to export yourself before 11 March 2020 (Budget day).
Similarly there may be a real risk that King Boris will introduce Lifetime IHT. It's incredibly easy to introduce and has existed in the past. In some unusual circumstances it already exists today - at a rate of 20%. At the moment IHT is a "voluntary tax". You can completely avoid it simply by giving stuff away.
On the pensions front it's been on the cards for years that tax relief could be cut to basic rate only (20% for everyone).
ziontrain said:
Cheib said:
What is Lifetime IHT ?!
Chargeable lifetime transfers - usually on a transfer of assets to a trust - attract IHT. The trustees would have to pay IHT at a rate of 20%.I really wish they would get rid of the taper which kicks in at 100k, in that at the moment my marginal tax rate seems to be about 65%; makes it seem pointless getting a pay rise.
Mind you, if they do so by removing the higher rate relief on pensions, it’ll completely screw me overnight. Sigh.
Mind you, if they do so by removing the higher rate relief on pensions, it’ll completely screw me overnight. Sigh.
Pheo said:
I really wish they would get rid of the taper which kicks in at 100k, in that at the moment my marginal tax rate seems to be about 65%; makes it seem pointless getting a pay rise.
Mind you, if they do so by removing the higher rate relief on pensions, it’ll completely screw me overnight. Sigh.
I’ve got it on good information that the taper will be raised in the budget. Mind you, if they do so by removing the higher rate relief on pensions, it’ll completely screw me overnight. Sigh.
rockin said:
To be honest, I think that simply shows how highly paid and molly-coddled some of these NHS guys actually are. I'm not aware of any reason why "senior doctors" should be any more affected by the pension rules than anyone else.
Happy to be corrected if I'm wrong!
try doing up to 60hrs a week with no back up as only doctor in practice covering semi rural area with small casualty hospital wards ambulance attendance as no ambulance available home visits emergency appts etc with no new gp's coming to area as viewed as too hard work......Happy to be corrected if I'm wrong!
Mr Pointy said:
That simply demonstrates that doctors are grossly overpaid and/or their pension arrangements are far too generous (thanks Tony Blair). A good first step would be to cut their pay by at least a third.
doctors did not decide pension arrangements government did and constantly move goalposts such as 2015 forced from old scheme to new scheme increasing pension age from 60-68lots of doctors I know are refusing extra shifts or be stung by back payments up to 2-3 yrs out of date as capita/SPPA cannot give accurate figures
it will be fine as likely in 10yrs there will be no full time gp's left anywhere due to increasing workload and retiring of gp's who are burnt out
rant over lol
p1doc said:
Mr Pointy said:
That simply demonstrates that doctors are grossly overpaid and/or their pension arrangements are far too generous (thanks Tony Blair). A good first step would be to cut their pay by at least a third.
doctors did not decide pension arrangements government did and constantly move goalposts such as 2015 forced from old scheme to new scheme increasing pension age from 60-68lots of doctors I know are refusing extra shifts or be stung by back payments up to 2-3 yrs out of date as capita/SPPA cannot give accurate figures
it will be fine as likely in 10yrs there will be no full time gp's left anywhere due to increasing workload and retiring of gp's who are burnt out
rant over lol
Have you worked out your current NHS pension value?
You should be able to login to the NHS Total Rewards website to get a valuation for your scheme(s).
You're probably in two schemes - the 1995 one and the 2015 one. Take your 1995 annual pension and multiply by 20, then add your lump sum. That should tell you your total pot value for that scheme. There isn't a lump sum in the 2015 scheme, so just take your annual 2015 scheme pension and multiply by 20. Add the two together and you'll get your total value.
You should be able to login to the NHS Total Rewards website to get a valuation for your scheme(s).
You're probably in two schemes - the 1995 one and the 2015 one. Take your 1995 annual pension and multiply by 20, then add your lump sum. That should tell you your total pot value for that scheme. There isn't a lump sum in the 2015 scheme, so just take your annual 2015 scheme pension and multiply by 20. Add the two together and you'll get your total value.
BritPop said:
Have you worked out your current NHS pension value?
You should be able to login to the NHS Total Rewards website to get a valuation for your scheme(s).
You're probably in two schemes - the 1995 one and the 2015 one. Take your 1995 annual pension and multiply by 20, then add your lump sum. That should tell you your total pot value for that scheme. There isn't a lump sum in the 2015 scheme, so just take your annual 2015 scheme pension and multiply by 20. Add the two together and you'll get your total value.
Thanks mate I didn’t realise that this was how you calculated a pots “value”. Seems like I might not hit lifetime limit after all so could potentially put a bit extra in. You should be able to login to the NHS Total Rewards website to get a valuation for your scheme(s).
You're probably in two schemes - the 1995 one and the 2015 one. Take your 1995 annual pension and multiply by 20, then add your lump sum. That should tell you your total pot value for that scheme. There isn't a lump sum in the 2015 scheme, so just take your annual 2015 scheme pension and multiply by 20. Add the two together and you'll get your total value.
Say someone was 5 years from retirement and still earning good money. If they checked their “pot values” and it came close to, or exceeded, the lifetime allowance, would it be prudent to stop paying into the pension, or would they still benefit from paying in?
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