Episode Details

It's another Meaningful Money Q&A, taking in the £100k tax trap, splitting pensions on divorce, safely switching investment platforms and much more!

Shownotes: https://meaningfulmoney.tv/QA38

01:59 Question 1

Hi Roger and Pete,

Long time listener, first time questioner. My wife and I have both earned in excess of £100k for a few years now, meaning I am acquiring a peculiar set of skills on the various ways to use pension contributions, rollover allowances, gift aids, etc to keep us both below the (entirely bananas) £100k cliff-edge each year.

My question is on the £60k pension annual allowance. Does it only apply to the amount of pension savings in a given year which can be made without paying a tax charge, or does it also count as the maximum amount of pension deduction which can be taken to calculate net adjusted income as part of completing our tax returns? The (slightly over-simplified) situation in my mind is that if I earned £160,500 in a given year, I would prefer to pay £61k into a pension, thereby reducing my net adjusted income to £99,500 to stay below the cliff-edge, even if I had to pay 40% tax on the extra £1000 above the pension annual allowance.

As a fun aside, I asked this to my preferred AI - and I leave a link to see if you agree with it's answer or not - https://g.co/gemini/share/8c23e91cb658 Stephen

07:58 Question 2

Hello Pete & Roger

Listen and enjoy all your podcasts regularly but every now and again you get one that addresses specific points to the individual listener. For me it was Podcast QA18. A really great podcast.

1. The 2015 changes to pensions made significant differences to pensions and most financial experts have rightly advised using your pension as one of the best places to put savings. It does seem unfair that you plan your savings and pensions well in advance for retirement based on government rules. and then you you find you are likely to have a sizeable IHT bill. At 78 it is difficult to turn the ship around quickly. Many more people will be affected by this over the next decade.

The main reason however for my question relates to ways to reducing the effects of this IHT change. The general allowances and the 7 year rule are all clear. However the main exemption that could help is the little used Gifts form Excess Income. I have read up as much as I can and the whole system seems rather vague and many things open to interpretation, even by financial experts. There is no clear and precise set of rules whereby you can be certain something is capital or income. Your executor will have to understand all this and have all the back up documentation to convince HMRC that the gifts are justified.

I do have excess income and spent significant time over the past weeks analysing all our expenditure and income sources ending up totally confused and with a severe migraine. Any advice on how best to handle this can of worms would be appreciated.

2) So many of us these days have children living in different countries with their families. All with different citizenship and residency situations in different countries. There seems to be very little information about IHT and general tax issues in relation to gifts and inheritance of money and pensions for children and grandchildren in this situation.

Best regards, Peter

16:52 Question 3

Hello Roger and Pete,

Thanks for a great series of podcasts. Some of them confirm what I already know and some give me insights, ideas and an understanding I didn't have. You provide a great service.

My wife and I are 54 and 55. We are getting divorced. The divorce is amicable and we want to share everything evenly. I take home £5k/month and she takes home £2.3k. We will split this evenly as long as we both work. Our pension fu