‘Fantastic tool for inheritance tax’: Use pension to mitigate payments and maximise estate

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Makala Green explained to Express.co.uk how the pension is a “fantastic tool for inheritance tax planning.”

The finance whiz is the first Black female charted financial planner.

She has worked with multi-million-pound companies like John Lewis, Waitrose and Metro Bank, as well as planning the finances of A-list actors.

As well as working as a fiancial planner, Makala shares her expertise on her Instagram, @TheWealthCheck, and on her podcast, Your Financial Journey.

She explained: “The pension within itself is a fantastic tool for inheritance tax planning.”

Saving into a private pension is a “win win on both sides”, Makala states.

There are a number of reasons saving into a pension is a savvy move, including the fact that – unlike other methods of investing – your pension isn’t a part of the estate taxed when you die.

This is why a pension is one of the most tax-efficient ways to save for later life.

This money can be spent on a lavish retirement and also left to family when you die.

“As much as you can build up within a pension, the better,” Makala said.

“You’ve got a set allowance to invest per year. Currently it’s £14,000.

‘I worked all my life!’ Free NHS prescription age change proposals slammed [ANGER] 
Fury at Sunak’s ‘brutal’ 55% pension tax raid [BACKLASH] 
‘Literally free money’: Vital pension insight from finance expert [INFLUENCER] 

“If you have the availability to do so don’t just invest the minimum. I would say maximise that full amount.

“A lot of people think, ‘I don’t want to put money into a pension because I can’t access it’.

“But you forget that money is your money. At some point you will come into being able to access that money and enjoy.

“Don’t cheat yourself. Maximise as much as you can.

“Plus, you’re also sheltering away from having to pay inheritance tax. So that’s a good opportunity to save money, if you have the money available to do so.”

How much is inheritance tax?

Inheritance tax is a tax on the estate of someone who has died, including property, money and possessions.

Not everyone has to pay inheritance tax and how much is paid depends on the value of the estate.

If the estate is valued at less than £325,000 then there is no inheritance tax to pay.

Inheritance tax is usually 40 percent and is only charged on wealth above £325,000.

The Government gives this example: “Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40 percent of £175,000 (£500,000 minus £325,000).”

Another expert has similar pensions advice. Ken Okoroafor runs the hugely successful platform The Humble Penny.

He urged Britons to make the biggest pension contribution they can with their employer to make the most of matching contributions.

Ken said: “Get matching contributions. Get as much matching as possible.

“It’s literally, free money, so get as much as possible to fill your pension, as much as you can if your goal is to remain in full-time employment.”

Follow Makala Green on Instagram at @TheWealthCheck and check out her website www.makalagreen.com

Source: Read Full Article