Another One Bites the Dust The great Queen anthem of the 80s is appropriate to the latest/recent attack by the Government [unlikely to be the last] on pensions, regarded as the last bastion of tax efficiency. Bad news for advisers, though the majority appear resilient to the [latest] changes but especially bad news for those who have sacrificed over the years to provide for later life and for family after their passing. There remains a few exemptions to the changes but confidence in these being targeted 'in due course' is sadly, high. Landlord member sites often include comments from those trying to help their contemporaries with insightful assistance in matters, typically to do with S24 and the ongoing debate of personal v company. For once I will leave that alone and focus on the fairly regular suggestion, made in good faith of course, to 'make pension contributions' pointing out the clear and obvious benefit of reducing assessable income/profit for tax purposes. For the personally owned investor, they require other forms of income of course but for the corporately owned, this is one advantage where contributions are capped only be the prevailing rules at the time. Putting aside, for now, the significant disruption to cashflow, pensions provide the opportunity or rather, obligation, to diversify investment into the projects sponsored by the financial services industry. Regulated funds. Financial advisers regularly seize on 'opportunities' to persuade us to give up the property game and, regardless of the huge tax cost, move whatever is left into FCA regulated investment wrappers [akin to some prisons] and avail ourselves of 'expert investment management'. Calculating the real cost of this requires a Mastermind like ability but advisers argue it is probably cheaper than the tax and compliance regime of staying with property. They may be right on this one! And so to pensions and the rule changes. As these changes are most felt at point of death it is perhaps easier to set aside concerns and focus on the here and now - although advisers usually talk about 'long term' and 'strategic planning' and other soundbites. The new measures undermine the 'freedoms' introduced over 10 years ago - freedoms which led to many being encouraged to put more away. It's almost as if the Government had a plan here... As we all know by now, on death, anything left - "unused" - will be included in the calculations for death or inheritance tax [IHT] The freezing of the bit we can leave - the 'nil-rate' band of £325,000 [higher under certain conditions] has been frozen for 17 years and is set to remain so for at least 5 more years. Those who, in another age, regarded IHT as a tax only for the rich, might think differently now [record receipts announced today of £8.5bn] An "unused"pension might just tip an estate over the line and provide interesting challenges for beneficiaries and in particular, personal representatives. Those in the FS industry will cry foul and point to the current attractions of tax relieved contributions and investment growth - even though it is into investments you can neither influence or control. And there's the cashflow issue - with ever increasing costs, maintaining a healthy bank balance is prudent. The next time someone pipes up with "make pension contributions' reflect on these latest measures and ponder whether there might be other, less cashflow draining options' to deal with the tax burden. Options which may cost very little but result in outcomes which solve the problem. Not forgetting a pension option which welcomes residential investment property...

Posted by Chris Haley at 2026-04-28 10:18:02 UTC