Financial literacy

[Squarebear]

The one time I used an IFA he proposed a pension that had mental charges, a significant proportion of which were destined for his pocket. I just couldn't bring myself to sign up.

I subsequently read an article highlighting this particular pension product and the hard sell that many IFAs were giving it.

 

[Cooperman]

The one time I used an IFA he proposed a pension that had mental charges, a significant proportion of which were destined for his pocket. I just couldn't bring myself to sign up.

I subsequently read an article highlighting this particular pension product and the hard sell that many IFAs were giving it.

I would always advocate getting a second or even third opinion on financial matters. The same applies with mortgage brokers who will always try and give you the best deal (for them, cough).

 

[Cooperman]

In all seriousness though when you said you’d like to pass on a little bit did you know that it will only be once you reach a million quid that there’s tax? And only then on the amount above a million?

Because according to reports today something like a third of people think they will suffer IHT despite hardly anyone actually paying it. And that’s a con from the government for making people think that.

Lisa, under what circumstances is it a million?

 

[Londonlisa2001]

Lisa, under what circumstances is it a million?

In the circumstance the post had described I was replying to. Two people save up, work hard, buy their house and want to leave it to their kids.

Your free band if you like is £325k. But you get an extra £175k if your estate includes a property (your house) and you are leaving that to either your kids or grandkids.
If it’s, say, you and your spouse living in the house, when the first one of you dies your estate passes (without any inheritance tax) to your widow / widower. But what also passes is your inheritance tax allowance. When your spouse then dies and leaves the family house to kids / grandkids, the allowance will be their £325k plus their £175k house allowance, PLUS your £325k plus your £175k house allowance. So a total of £1m before any tax is due.

It’s still the most usual circumstance - a married couple (or civil partnership) leaving their house and everything else to their kids or grandkids - it’s a million free before tax.

If you are a single person (perhaps divorced or a single parent) leaving a house to kids or grandkids, then it’s £500k.

 

[Londonlisa2001]

Have you thought about sharing your large expensive house with those less fortunate Lisa? I have taken in a few Ukrainian families over past 18 moths and it was a rich, colourful and rewarding experience for all.

I didn’t say I had an expensive house I said it’s in a relatively expensive part of London. It’s valuable now because of where it is but we bought it the best part of two decades ago when it needed a shed load of work so it wasn’t expensive then.

It’s an example of why IHT isn’t really a double tax. I haven’t earned the increase in value, it’s just happened (the increase due to us doing it up is I suppose earned but whatever).

As it happens, we’ve only recently moved back after being homeless for two and a half years because of flooding so no, haven’t had any Ukrainians.

 

[Londonlisa2001]

The government and the media who fail continually to correct that particular narrative. Some of the big issues here is that financial advisers are heavily regulated (more than a large proportion of industries) and there is a level of mis trust of them because "Bob" in the pub knows better. Then you also add in the likes of Martin lewis who is seen as some level of god but has no financial advice qualifications.

For me you are spot on as far as IHT is concerned in that it impacts such a small number of people.

That said there are so many misunderstandings out there about tax and financial positions as a whole

It suits the government and media to keep people thinking stuff that affects the best off actually affects everyone so they don’t kick up a fuss. It’s dreadful. Agree about all sort of taxes and financial matters. I really think we ought to have schools teaching this sort of stuff so people can make informed decisions.

 

[Cooperman]

In the circumstance the post had described I was replying to. Two people save up, work hard, buy their house and want to leave it to their kids.

Your free band if you like is £325k. But you get an extra £175k if your estate includes a property (your house) and you are leaving that to either your kids or grandkids.
If it’s, say, you and your spouse living in the house, when the first one of you dies your estate passes (without any inheritance tax) to your widow / widower. But what also passes is your inheritance tax allowance. When your spouse then dies and leaves the family house to kids / grandkids, the allowance will be their £325k plus their £175k house allowance, PLUS your £325k plus your £175k house allowance. So a total of £1m before any tax is due.

It’s still the most usual circumstance - a married couple (or civil partnership) leaving their house and everything else to their kids or grandkids - it’s a million free before tax.

If you are a single person (perhaps divorced or a single parent) leaving a house to kids or grandkids, then it’s £500k.

Thank you, the simplest explanation I have read concerning this matter.

 

[Squarebear]

I didn’t say I had an expensive house I said it’s in a relatively expensive part of London. It’s valuable now because of where it is...

Clears that up