London Office: 020 3755 3235 | Ipswich Office: 01473 384 858 | Email:

Using Your Pension Plan For IHT Planning

If you die before 75, the fund can pass tax free to your beneficiaries. After age 75 however you can transfer the income to children / grandchildren who would then only pay tax on the income generated from the fund.

Richard suggested borrowing the cash to maximise benefits which (if the allowances and relevant earnings were available) does look very attractive:

Existing Pension Fund £140,000
Client Borrows:   £80,000
Net Of Tax Contribution   £80,000
Basic Rate Addition   £20,000
Gross Equivalent Contribution £100,000
Client Now Has A Pension Fund Of: £240,000
Client Gets Additional Tax Relief Of:   £20,000
Client Takes 25% Of Total Pension Fund Tax Free   £60,000
So Net Borrowing Becomes  –
Client Now Has A Pension Fund Of £180,000

This can then be passed onto dependants.

Please remember that the July statement is likely to remove tax relief on pension contributions for those earning over £150,000, so now may well be a “buy now whilst stocks last” moment.

These more esoteric uses of pensions do require specialist skills which we can offer.   We specialise in high net worth individuals and will be happy to assist other professionals to maximise their clients’ tax allowances.


The latest news from Swallow Financial Planning and the financial industry

Budget Summary March 25, 2020

The 2020 March budget has all but been forgotten amidst the current Covid-19 pandemic. The following is our summary of the key...

Commercial Property Funds March 20, 2020

Many clients will have seen that Bricks and Mortar investment funds have been suspended. Bricks and Mortar funds own physical property. Real...

Swallow Financial Planning Contact Update – COVID-19 March 17, 2020

The actions being taken to contain the current Pandemic are getting ever more draconian. This note is to explain to clients changes...

Swallow Financial Advice Newsletter

The latest news from Swallow Financial Planning and the financial industry