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Did you know? Inheritance Tax, Pensions and ISAs


Pension withdrawals hit a new high in 2018/19 of just over £8bn, which was up £1.5bn from the year before. HMRC have recorded tax from pension receipts being significantly higher than predicted.*

One of the problems the government has in relation to pensions is that their two main goals aren’t especially compatible. They want to incentivise more people to save higher amounts for their retirement, whilst also holding a strong desire to keep the cost of tax relief down to sustainable levels. The long standing tension between these two objectives is the most likely factor in many of pension rule changes we’ve seen over the last few years. This has resulted in NHS consultants being ‘up in arms’ as they are worse off when they’ve worked overtime due to pension legislation!

Auto-enrolment into staff Pension Schemes is still viewed as successful with a high of 8.5 Million individuals in 2016/17 contributing to a Pension Scheme. Interestingly, it’s the under 35s making up approximately 41% of people contributing to a Personal Pension in 2017/18 tax year, up from 19% in 2012/13.

Auto-enrolment is creating a pool of people who are beginning to save at a younger age. It’s possible that as a result, these savers could be more financially aware and so more likely to consider increasing their contributions voluntarily when they are able.


Inheritance tax

The last HMRC statistics show receipts for March and April 2019 up by 40.1% and 11.2% respectively over the same period last year. The Government collects just over £5bn a year from inheritance tax which is part of their total tax take of £623bn in 2018/19. The big hitter’s (Income Tax, Capital Gains Tax and National Insurance) were up in April 2019 by £2.4bn, whilst Corporation Tax was down by £0.3bn.


ISA Statistics

The Statistics show that there were 10.8 Million adults with ISA subscriptions in 2017/18, slightly down from the previous year. The big reason for the fall is the unattractive interest rates on cash ISAs compared to deposit rates, with the savvy investors doing the maths. Interestingly, Stocks and Shares ISAs subscriptions rose by 246,000 and junior ISAs subscription rose by 113,000.

At the end of 2017/18 the market value of Adult ISA holdings stood at a staggering £608bn. This represented a 4% increase compared to last year. The increase was due to the market value of funds held in Stocks and Shares rising by 7% compared to the year before. Cash ISAs holdings account for 44% of market value and Stocks and Shares 56%.

Finally, whilst the gender split of numbers of ISA subscriptions is relatively equal, the figures show while more women are investing in stocks and shares ISAs than in previous years, overall more women prefer cash ISAs compared to more men having stocks and shares ISAs.

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This article is for information only and no advice should be conferred from the content.

Publish date: 5th June 2019

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