Prudential - Technical Update from Les Cameron- NEW Bond Gain Tool
21 October 2020
Relatively quiet times but some interesting news, exciting news and really exciting news (in that order so you need to read until the end).
The first news that jumped out at me was that there had been a reprieve for pension tax relief! Interesting I thought. To quote “The government will continue to engage with stakeholders to understand the regime’s impacts and gather evidence through consultations such as those listed above but does not think it is the right time now for a formal evaluation.” As I see it, not doing a ‘formal evaluation’ is not a commitment to no change. You can still do a change without undertaking any formal evaluation of the current regime! Not sure I’m going to be reading too much into that one or taking much comfort from it either. The cynics (who me?) might say what’s the point of reviewing something you know you're going to change. And anyway. If you have the cash? And you like tax relief? Shouldn't it be invested - rumour season or not?
And a flurry of Staveley case commentary “good news for pension transfers in ill health”. Mmm. Not quite sure about that! The case did have some points irrelevant today as the law on Inheritance Tax (IHT) and pensions has moved on. But, before the case we knew transfers would be exempt where there's no intent to confer gratuitous benefit. After the case? We know transfers will be exempt where there was no intent to confer gratuitous benefit! And if the benefit upside beats the potential IHT downside it’s a need to know, not a stop it happening, isn’t it?
But there has been exciting news (well for me) our long-held pension tax relief record of 343% has been broken! One of our Account Managers was showing our (relatively) new Tax Relief Modeller to an adviser whose 72 year old client had a large bond gain to deal with and was wanting to know the tax liability. He must have been listening in training as the mantra is where there’s a gain always check out what a pension contribution could do. Or this video might have been a very valuable 11 minutes! In this case we’d £8k state pension, £38k rental income and a £240k gain over 37 years. Long story short – cheque for £2,880 and over £18,000 of tax saved. And a new record of 551%!
Now the really exciting news…
Our new Bond Gain Tool launches today. It kind of does what it says on the tin. You put in details of the bond history and then it lets you model different withdrawal options based on the amount of money to be realised. We get asked for help on full and partial withdrawals a lot – here it is!
Drop your Account Manager a line for a demo.
Any thoughts or feedback then drop me a line.
Les
