Inheritance tax

The question of, I mean, you were saying ISIS quite often uses a bridge to retirement, which makes sense.

But in some cases now, it might be the case that people are starting to draw or starting to consider drawing their pensions ahead of their ISA because of tax changes to pensions, i.e. pensions falling into the IHT net.

I mean, ISIS are also part of that net, but it has made people maybe, we are seeing some signs they are kind of rethinking the order in which they take their money in retirement.

Yeah, typically it was always the case that people would take any income they need from their ISAs first, drain those and leave the pension as those could be passed on free from inheritance tax.

But from April 2027, pensions will be included in a person's estate when calculating how much IHT is owned.

So that might mean that you need to rethink your approach to how you draw on pensions and ISAs.

it could be the case that people might want to consider whether it would be best for their financial and estate planning to draw from the pension first.

And lessen the amount that would be left in the pension that could be liable for IHT once the rules change.

What's definitely changing now, as we've seen particularly over the last three years, is the level of cover for policies has increased significantly.

And that's all around... driving and supporting and planning for inheritance tax.

And that's where we're seeing it's being used more and more for a whole host of different reasons.

Yeah, that's the sort of obvious kind of use cases now, I think.

Old assets, you're going to get taxed on them.

And if you know what your liability is, or you think you know what your liability is going to be, if you've got enough to self-insure, you've got enough funds, then you need to put them somewhere and also make sure they're accessible for your dependents when that time comes.

um and there are also other planning routes as well but whole of life has a really important part to play in inheritance tax i think it's not the solution but it should be part of the solution for some

are there any kind of scenarios like you say whole of life lends itself to inheritance tax planning making money available to executors to pay the inheritance tax so that the estate can be distributed But are there any sort of scenarios where somebody might come to you and say, I think I need whole life insurance, but where you might direct them away from that into an alternative?

We take a special look at May's quality for livestock farmers after another early harvest and in an extraordinary interview.

Former Farm Minister Daniel Zeichner says he was given no warning about government plans to impose inheritance tax on farmers.

Welcome to the Farmers Weekly podcast.

I'm Johan Tasker.

I think it was on Tuesday, talking about how government needs to obviously...

The undercurrent of the whole thing, I suppose, around the Countryside Alliance is the sort of country sports stuff and all the consultation that's going on there around trial hunting, etc.

But they did turn around and say, you know, the whole inheritance tax thing needs throwing in the bin.

Let's start again, which, as you can imagine, would be incredibly popular with most of the rural people.

Yes, they do still exist.

And that is the potential for the party to abolish inheritance tax.

Now, this is, according to many, many polls I've seen, just about one of the most heated taxes in the country.

Could this be an inflection point for the Conservatives' polling numbers?

Well, perhaps it could be so, but I think this is a really, really interesting tax.

Now, I can't remember the exact figures, and I expect you will be able to remember, but it's something like 80% of the country think they'll pay inheritance tax, but actually only about 5% of people do pay inheritance tax in the end.

And that shows why, in lots of ways, I mean...

I don't know if we can go as far as to say it's a bad tax, but you can see why it's a deeply, deeply, deeply unpopular tax and why it might not be a very sensible tax.

In these bonus podcasts, we talk about the best strategies for making the most of your money.

I'm Marin Somerset-Webb, UK money editor at large, and this week we are talking inheritance tax again.

Next year, in April 2027, the IHT rules will be changing again and more pension pots will become eligible for inheritance tax.

However, there are a few things that you can do to reduce your final bill, such as gifting cash to make things as tax efficient as possible.

So first, we're gonna have a little chat about the rule changes, and then we're gonna talk about what you can do to reduce your final bill.

Sarah, thank you for joining me.

Oh, thank you for having me.

The point here is not really to talk about the changes to pensions and IHT next year, but it is important because it does mean that a lot more of people's assets are being pulled in to the IHT net, which means that more people will end up being liable for IHT in the first place.

Mm-hmm.

A lot of our clients come to us because they want to reduce their IHT exposure.

And what we have realized over the years is it's much easier to gift shares of a company rather than gifting individual properties.

Mm.

But a suitable policy where it's joint life second death, because most of the time people will-- On the first death, everything goes on to spouse-

Yeah

... which means there's no IHT to pay, and then you're protecting it on the second death.

Sometimes you can get these policies up to the age of 90, and if you look at the lifespan, I'm sure a lot of people would want to live above [chuckles] 90.

I think you mentioned it there, and I think it's important to give it, uh, airtime, is Keir Starmer's, you know, farming tax, the, uh-

The inheritance tax, yeah.

Mm-hmm

...

the inheritance, yeah, the inheritance tax.

Keir Starmer's inheritance tax.

Like, I live in a rural area.

I live in, I live in Dorset, and you saw lots of signage.