If ever there is a UK tax that needed a major overhaul, then Inheritance Tax (IHT) must be a top candidate. Many families will be delighted to hear that the Chancellor, Philip Hammond, has written to the Office of Tax Simplification (OTS) asking them to reform IHT “to ensure that the system is fit for purpose and makes the experience as smooth as possible”
Mr Philip Hammond in his letter asked the OTS to look at the technical and administrative issues with Inheritance Tax, the process of submitting returns and paying the tax. Mr Hammond also called for a review of the problems surrounding estate planning, and whether the current framework causes ‘distortions’ to taxpayers’ decisions regarding investments and transfers.
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Many people spend their working lives planning and saving for their later years. However, when they reach retirement they can be unsure as to how best to allocate their cash. This is where cash flow planning can really help.
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In yet another sign that retirement is becoming an increasingly fluid concept, figures from the Office for National Statistics show that the number of women working past the age of 70 has doubled in the last four years.
The abolition of the compulsory retirement age in 2011 has meant that many more workers, men and women, are choosing to work on past their normal retirement date. For some, it’s the desire to keep physically and mentally active into their later years, for others the freedom to work for longer provides a welcome boost to their retirement income. With increased life expectancy, many more people are set to live active lives well into their eighties.
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Today, savers reaching retirement have more choices than ever before about how they use their pension pots to fund their retirement.
Instead of simply using their pension money to buy an annuity that provides a guaranteed income for life, many choose to invest throughout their retirement years. The challenge this brings is to deliver a continuing income, while ensuring they don’t run out of funds later in life.
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According to research carried out for the Pensions Policy Institute, many pensioners are relying on their state pension for three-quarters of their income. It can come as a shock to many that their state pension entitlement increased to £164.35 per week from April 2018, but only for those who have a complete record of National Insurance contributions, meaning that some people will receive less. On top of that, the government announced last July that the state pension age would be increased to 68 between 2037 and 2039.
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