Pensions..

[PaulSB]

Also: pulling money out of a pension, and if gifting it immediately, it might be difficult to convince HMRC that it was not a deliberate tax avoidance measure.

Yes, this raises an important general point on tax avoidance.

I well recall, and was impressed by, the approach of the solicitor who helped write our Wills. She was very clear that if "we", meaning the practice, believe something is purely for tax avoidance we won't write it. That meant a great deal to me and helped cement my feeling we had chosen the right person.

 

[T4tomo]

Also: pulling money out of a pension, and if gifting it immediately, it might be difficult to convince HMRC that it was not a deliberate tax avoidance measure.

That doesn't matter at all. Its IHT lifetime gifts rule - anything over 7 years pre death is outside scope and then tapered relief for anything inside the 7 years. BTW tax evasion is illegal, tax avoidance / tax planning is generally legal!

the in my post does mean I wasn't entirely serious about predicting 7 years from one's demise.

However serious point though: if you get to the point that you have a stonking great pension pot, and you're barely touching it / living of the income, it makes massive sense to gift some of it to your children whilst your alive and they have more need for it at that age, i.e when raising a family for instance, than waiting until you die. Equally downsize your house - gift the surplus to your kids to upsize their house(s).

 

[nogoodnamesleft]

Also: pulling money out of a pension, and if gifting it immediately, it might be difficult to convince HMRC that it was not a deliberate tax avoidance measure.

There are quite a few ways to "gift" without attracting attention (and without even getting close to tax).
HMRC and tax only becomes an issue once the estate becomes more substantial at which point the tax system has enough loopholes to ensure those with broadest shoulders only have to give the appearance of paying tax rather than having to actually part with money.

 

[glasgowcyclist]

Also: pulling money out of a pension, and if gifting it immediately, it might be difficult to convince HMRC that it was not a deliberate tax avoidance measure.

I thought tax avoidance (as in tax efficiency) was legal, it's tax evasion that not.

 

[PaulSB]

I thought tax avoidance (as in tax efficiency) was legal, it's tax evasion that not.

This is true but increasingly the Revenue will take a view on whether or not any action was taken specifically to avoid tax. If their view is there has been deliberate tax avoidance HMRC can, I understand, challenge the action.

For example my wife and I changed the ownership of our house from Joint Tennants to Tennants in Common. The first means the property is owned entirely and equally by both parties and automatically passes on at death. Joint Tennants each own a percentage of the property, in our case 50%, and we can individually decide who our heirs will be. On first death 50% of the property passes into trust for our son. The surviving partner receives nothing from the property. Importantly the survivor cannot be forced to leave the property.

We did this to help secure our disabled son's future on our deaths. One by product of this process is there cannot be a forced sale of the property.

We took this decision ten or more years ago. It's clear what our intentions were. If this was done a few weeks before death of a spouse with a known terminal condition HMRC would probably take the view there was some form of tax avoidance intended. If this was the case HMRC might challenge the action on the basis tax avoidance was the only purpose for the decision.