Death & Taxes

Mar 14, 2005
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I know we all like to have a good moan about the Forum going down and how frustrating it is but I thought people might like to share something that is happening right now to a family courtesy of the Inland Revenue Capital Taxes Office (CTO).

A gentleman retired using a "Drawdown" arrangement whereby he takes an income but the funds remain invested. Sadly he died after just a few years into retirement and as is allowed his wife took over the scheme and the income was paid to her. Even more sad was the fact that less than a year after her husbands death, the breast cancer she had 7 years before came back and she sadly died.

Under IR for Drawdown (or Pension Fund Withdrawal) rules the fund is paid into the estate less 35% tax. This is OK and usually no further Inheritance Tax is payable. However, because this poor lady had the audacity to die within two years of her husband, the CTO assumes that it is planned "tax avoidance".

So the Capital Taxes Office want to snatch over 60% of the "pot" this gentleman accrued over his lifetime. Why 60% plus?

If we assume that the fund is worth £100,000 then the total tax hit is £61K

£100K less 35% Drawdown Tax = £65K which is then subject to 40% Inheritance Tax = £39K for the family and £61K to Gordon Brown. Thus by far the biggest beneficiary of this poor couples estate is the taxman.

Bear in mind that the income already taken has been taxed and the dividend growth within the fund is taxed and I think you will see that in such circumstances saving in a pension is just not worth it.

Mind you this huge tax hit is required to pay the guaranteed, index linked pensions that the civil servants enjoy - i.e. those people that make these rules so that their pensions can be paid for out of the taxes that we all pay.
 
Aug 28, 2005
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Thanks for that well informed letter clive ,i have actually made a copy for myself ,so i can read it now and again ,and remind myself what tossers are running this country .

I even have sticker in my car which says Inheritance Tax is Theft
 
May 21, 2008
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That ain't theft, it's "day light robbery"!!

You pay your taxes all your life, get taxed on everything you buy and then taxed when you "kick the bucket" and should your loved partner dieof a broken heart too soon!!

They are branded a criminal too !!

Can't type what I realy wanted too say even the oxford dictionary haven't got those words of disgust for the great british tax scam!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
 
Mar 14, 2005
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Another gem is the fact that despite all of us actually qualified to know that Final Salary pensions were only as "guaranteed" as the financial strength of the company running the scheme, the FSA and the Treasury told everyone in writing that Final Salary schemes were "guaranteed". When it was categorically proved (by many people sadly loosing their pension) that such schemes are not guaranteed the FSA & the Treasury stated that what they meant by "guaranteed" was not the same as that by which most people would understand the term!

Confused? - Yes - Ripped off? - most certainly.

As a sop to their back-benchers who were and still are getting a lot of flack a Compensation scheme was introduced. However, the Treasury has decided that there is not enough money in the scheme to compensate everyone - so some will sadly continue to be ripped off.

The cost of full compensation - about
 
May 12, 2006
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Problem is at this moment in time we have no alternative, the whole stinking bunch are out to fill their boots at the trough of human kindness ie the taxpayer.

Val & Frank
 

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