How to Avoid Falling into the IHT Trap
There were changes to the Inheritance Tax nil-rate band in April 2017, but what are the changes, and what do they mean for consumers?
Those on the Government-backed pension scheme, NEST (National Employment Savings Trust), could be hit with taxes up to 40%. That’s an estimated four million people in the UK. NEST was created to support the Government’s flagship pension provider, requiring employers to contribute to a private pension on behalf of their employees.
NEST pensions and IHT
In response to these claims, NEST executive director of product and marketing Gavin Perera-Betts said: “We know that IHT will impact a very small proportion of our membership and applying Trustee discretion to all pots can be costly. That is why, in the event of a member’s death, their NEST pension pot is included in their estate for IHT purposes.”
“However, NEST regularly reviews our policies and processes. With the annual contribution limit and the restrictions on transfers into NEST lifting in April, we will continue to consider our policy in relation to member deaths to ensure it continues to effectively balance the needs of our members.”
Risk of losing tax incentive
New rules and regulations allow for an additional Inheritance Tax allowance on top of the usual £325,000 per person. But those who’s Will includes a Discretionary Trust may be at risk from losing out on a tax incentive.
The NEST pension scheme allowed savers’ unused funds to go uncounted as part of their estate, making them exempt from IHT and thus allowing more capital to be passed on to children and loved ones.
And since the changes in April 2017, NEST is predicted to grow significantly, due to the previous ban on transfers into the scheme being lifted. Annual charges for pensions transfers will now be dramatically low, at 0.3% per annum, thanks to a new arrangement.
Protect your inheritance
With IHT rules and regulations constantly shifting and evolving it can be tricky to navigate your personal finances and inheritance tax.
gpfm Financial Planners keep abreast of all financial developments and are well equipped with the knowledge and expertise to make the very best of your money, helping you achieve your inheritance targets and giving you total peace of mind about your family’s future.
Contact our Chartered Financial Planners on 01992 500261 or email firstname.lastname@example.org.
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.