DC/Nest part of Estate for IHT.

[posted]

I know last year there was news that the chancellor, at some point in the future (2027?) they intend to include Pension pots as part of the Estate when it comes to calculating IHT.

That was just news and no such plans in place, as far as I’m aware.
So as I understand it today, a pension pot (if not being drawn upon) isn’t included.

Got my first Nest statement today and was surprised to read this little nugget… am I confusing 2 different things?

If you die before taking your money out of Nest, the value of your pot will usually form part of your estate for inheritance tax purposes. Inheritance tax is a tax on the estate (the property, money and possessions) of someone who's died.
If you're concerned about inheritance tax, you can ask us to use our discretion to decide who to pay your pension pot to.
This is called making an expression of wish. If you choose to do this, your pension pot usually won't be treated as part of your estate for inheritance tax purposes.
Making the right decision isn't always easy when there are legal implications. It may be a good idea to get professional advice before updating your details on the nestpensions.org.uk website. Go to My account, then Manage account and click on My beneficiaries.
For more information on inheritance tax please visit hmrc.gov.uk/individuals and select inheritance tax.

For clarity, for beneficiaries I’ve chosen an Expression of Wish Form rather than a Nomination. The former shouldn’t be included in calculation of estate whereas I believe the latter would.

[RobertT]

I'm no expert on taxes, but my understanding is all DC pensions will potentially come under IHT from 2027, regardless of whether you nominate or express a wish. Although I'm more than happy to be corrected.

You also need to bear in mind that everyone has a threshold of £325k before IHT comes into play with cash, etc plus another £175k on property and if you leave your assets to your spouse there's no IHT to pay at that point and their threshold effectively doubles to £1million on your death.

So in practice, most people are unlikely to be affected, with the caveat that thresholds are due to be frozen until 2030.

This is what Scottish Widows say about it:
https://platform.scottishwidows.co.uk/c ... pril-2027/

And this from Royal London:
https://www.royallondon.com/guides-tool ... from-2027/

[posted]

I'm no expert on taxes, but my understanding is all DC pensions will potentially come under IHT from 2027, regardless of whether you nominate or express a wish. Although I'm more than happy to be corrected.

You also need to bear in mind that everyone has a threshold of £325k before IHT comes into play with cash, etc plus another £175k on property and if you leave your assets to your spouse there's no IHT to pay at that point and their threshold effectively doubles to £1million on your death.

So in practice, most people are unlikely to be affected, with the caveat that thresholds are due to be frozen until 2030.

This is what Scottish Widows say about it:
https://platform.scottishwidows.co.uk/c ... pril-2027/

And this from Royal London:
https://www.royallondon.com/guides-tool ... from-2027/

Yes fair enough, when it happens. But given there isn’t a bill or formal proposal yet, let alone it not being Gov/HMRC policy currently in force, I don’t see why Nest have referred to it as ‘usually’.

A bit premature in my opinion.

[posted]

This is what Scottish Widows say about it:
https://platform.scottishwidows.co.uk/c ... pril-2027/

And this from Royal London:
https://www.royallondon.com/guides-tool ... from-2027/

Just going through that SW article alone sheds a bit of light on how the wealthy protect their assets and pass wealth down the generations with very little tax.
I’d heard of various trusts but never things like Loan Trusts and Joint Life, Second Death Policies.

[RobertT]

My reading of the Nest text is that it applies to the rules as they are now.
So if you nominate someone to receive your pot, it reduces the chance of it being considered part of your estate for IHT purposes, which is theoretically possible in certain circumstances at the moment, if you don't nominate anyone.
I think they're just trying to cover all bases, although they haven't worded it very well.

I get the impression the changes to pensions IHT are more a case of government changing the rules rather that any major laws.
There has already been a 'technical consultation': https://www.gov.uk/government/consultat ... nd-payment