From Morningstar: 2024-10-30 12:18:21

The Autumn Budget announced significant changes impacting personal finance, including bringing pensions into inheritance tax calculations from 2027. This means pension pots will be included in potentially chargeable assets when an individual dies, affecting how pensions are used in retirement planning.

The government aims to make the inheritance tax system fairer by taxing wealthy estates more. This change on pensions at death is part of a wider effort to ensure pensions are not used for accumulating capital sums for inheritance purposes. The move is seen as a tax raid on pensions, affecting those who pay inheritance tax.

The 2027 change will impact retirement planning significantly, as pensions may no longer be a tax-efficient way to pass wealth to the next generation. Advisers will need to rethink asset drawdown strategies, as clients may need to gift assets earlier to limit taxation at death. This change may lead to clients running out of money in retirement.

Current inheritance tax rules include a £325,000 tax-free allowance before paying a 40% tax rate. The freeze on this allowance until 2030, alongside other allowances such as property, affects how much individuals can pass on tax-free. The changes also impact AIM shares, reducing tax relief from 40% to 20%.

The Budget also focused on removing tax avoidance through offshore trusts to shelter assets from inheritance tax. High net worth individuals will be most affected by these changes. The British ISA, a potential investment avenue for domestic equities, was scrapped due to mixed responses.

The Budget confirmed an increase in the state pension from next year but made no changes to tax-free withdrawals from private pensions. There were no mentions of changes to state pension age, a topic that may need to be addressed in the future. 1. The United Nations reports that global carbon emissions reached a record high in 2021, with a 4.9% increase from the previous year. This surge is attributed to economic recovery post-pandemic and a lack of significant efforts to reduce emissions.

2. In a landmark ruling, a US court orders Johnson & Johnson to pay $2 billion in damages to talcum powder cancer victims. The court found that the company’s products contained asbestos, leading to ovarian cancer in thousands of women.

3. The latest data from the CDC shows that COVID-19 cases in the US have dropped by 35% in the past month. Hospitalizations and deaths have also declined significantly, with experts attributing the decrease to high vaccination rates and increased immunity from previous infections.

4. Tesla announces plans to invest $1 billion in a new Gigafactory in India. The facility will manufacture electric vehicles and batteries, aiming to meet the growing demand for sustainable transportation in the country.

5. The UN warns of a humanitarian crisis in Afghanistan, with 97% of the population expected to fall below the poverty line by mid-2022. The country is facing severe food shortages, economic collapse, and a healthcare system on the brink of collapse.



Read more at Morningstar: Inheritance Tax Blow for Pension Savers in Autumn…