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Springfords LLP blog

Some news, views and comments about everything and anything, relevant and irreverent.

Retirement - tax twilight or coming gloom?

05 June 2014

Proposals to make retirement less taxing are tempered by figures showing more retirees than ever are facing big bills from the Chancellor.

Everybody’s favourite guest presenter of Have I Got News For You - Boris Johnson - has put forward ideas to incentivise older Londoners to downsize.  In a report picked up by the Times, Boris, who is also Mayor of London in his spare time, says that if over 65s were exempted from inheritance tax on the profits of a downsizing move, that would help free up larger properties in London, and help with the city’s acute housing shortage.  More so, the Mayor’s right hand man on housing, Richard Blakeway has put forward the proposals to Treasury ministers.  Soon to downsize, average London retiree, Roman Abramovich, was not available for comment.

The overarching issue though, especially for those of us living in areas where property prices are less stratospheric, and not necessarily going up like a rocket, is the ever-present prospect of inheritance tax.  Rather like a capital ship on the horizon, it’s only a matter of time before IHT comes about and levels its guns upon us.

Fortunately, our personal taxation team have a sort of financial ‘over the horizon’ radar, and can spot this danger before it gets within firing range.  A quick call to our team will set you right - though you probably want to do it at least seven years before you plan to join Davey Jones.  Yes, inheritance tax - the tax that knows when you’ll die.

Meanwhile, staying alive is no escape.  Even in retirement, households paid on average £6,400 in direct and indirect tax out of gross income in 2011-12.  The figures come from analysis conducted by Prudential, that estimates tax paid by all retired households totalled £45.6bn - or enough for an HS2, with change left over for an aircraft carrier and a new yacht for Mr Abramovich. 

An organisation we’re all eligible to join - The TaxPayers' Alliance - has reportedly said that the taxman never stops dipping into our elderly pockets.  After a lifetime of hard work, their statement says, retirees are angry that they give up nearly a third of their hard-earned income to the Treasury.  Do you think that’s true?  If you’re old - and angry - get in touch.  Actually, don’t wait until you’re old, and/or angry, just get in touch.  We’re happy to help you plan for whatever lies ahead.

Meanwhile, what should you do if you’re sitting in a big house and wondering if someone could make better use of your assets when your gone, instead of the Chancellor of the Exchequer.  If you’d rather see someone closer to you benefit - and not contribute a couple of sleeper lengths to a high-speed railway project somewhere - give us a call and we’ll help you make plans now.  If you think you don’t need to bother - well - Have We Got News For You...


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