The benefits of using pensions as a savings vehicle are well known – they offer excellent tax relief when paying in contributions, and also when withdrawing funds, dependent upon the client’s marginal tax rate.
But there are other benefits to consider when using pensions as a savings vehicle, namely the potential relief from inheritance tax (IHT).
With the new flexibilities around pension access (for those over 55), people are very keen to withdraw funds as soon as possible, however for those with estates potentially liable to Inheritance Tax, pensions should be really classed as ‘first in, last out’.
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