Following the Marriage (Same Sex Couples) Act 2013 the Government are were obliged to review survivor benefits in occupational pension schemes. The review looked at differences in occupational pension schemes, namely:
same sex widows and opposite sex widows
same sex widowers and opposite sex widowers
opposite sex widows and opposite sex widowers
It doesn’t make any distinction between civil partners or married couples because there shouldn’t be any difference in benefits available.
HMT liaised with relevant parties both inside and outside of Government to obtain details of any differences applicable. GAD was also commissioned by HMT and DWP to estimate the costs of removing these differences.
Key findings of the review include:
The capitalised cost of removing differences in survivor benefits between opposite sex surviving spouses, same sex surviving spouses and surviving civil partners in the public service pension schemes is estimated at around £2.9 billion.
Of this around £1 billion would be payable immediately in respect of benefits due before 1 April 2015. It is estimated there would then be ongoing costs across public service schemes of around £0.1 billion per annum into the 2020s, reducing thereafter.
The estimated cost to the private sector schemes of removing these differences is around £0.4 billion.
Removing differences in the survivor benefits provided to surviving same sex spouses and civil partners on the one hand and those provided to opposite sex widows on the other is estimated to have a capitalised cost of around £0.08 billion to the public service schemes
The estimated cost to private sector schemes of removing these differences is around £0.1 billion.
If private sector schemes were to provide benefits to same sex couples on the same basis as opposite sex widowers, as most public service schemes do, this is estimated to cost £0.1 billion.
Public service schemes exceed the statutory minimum requirement which permits occupational pensions schemes to provide survivor benefits for same sex couples only taking account of service since 2005. However, the majority of public service schemes only take into account service from 1988 when calculating same sex survivor benefits, and so rely on paragraph 18 of Schedule 9 of the Equality Act.
Of the 27 per cent of private pension schemes that were found to have a difference in the way survivor benefits between surviving opposite sex spouses and surviving civil partners were calculated, around two-thirds only took into account accruals after 2005 in those calculations.

Pension scams cost Brits £4 billion a year and are anticipated to be the next big financial scandal, it was reported this month. A TV celebrity is among thousands of Brits who transferred cash out of defined-benefit pension schemes into inappropriate or high-risk ventures.
The well-known broadcaster, who cannot be named for legal reasons, invested more than £1million into an offshore pension scheme which is now feared to have collapsed. It comes after reforms by George Osborne allowed savers access to a quarter of their pots tax-free from the age of 55. In one case a former army veteran handed over £34,000 to invest in truffle-free farms that were never cultivated. Another saw an airline pilot lose £380,000 in a scam now pursued by HMRC.
Baroness Altmann, a former pensions minister, told The Times: “Pension scams have the potential to be the next big financial scandal. Commentators believe that regulators have failed to respond with adequate urgency and are leaving consumers at the mercy of fraudsters. It is thought a third of all pension transfers exhibit “red flags”, up from one in 19 three years ago.

Families could cut their inheritance tax bills by thousands of pounds by using a little-known rule that allows them to adjust the valuation of the estate of a deceased relative if house prices have fallen. The recent decline in property values, especially in London, makes the tax concession particularly valuable now. House prices in the capital fell by 4.4% in the year to May, the biggest drop in a decade, according to data published last week by the Office for National Statistics. This follows a general slowdown in house price growth over the past three years, driven mainly by market slumps in the south and east of England. As a result of these falls, many families risk paying too much inheritance. When someone dies, any land and buildings they own are part of their estate when it comes to working out IHT. Most estates don’t have to pay because they are valued at less than the threshold: £325,000 in 2012-13. Above this, tax is paid at 40%.

If HMRC believes the executors have been “negligent” in the way they have done the valuation, the estate could end up being landed with a fine of up to 100% of the extra liability. The good news is if you sell a building or land within an estate for less than the value that you paid IHT on, you may be able to claim relief, provided it was sold within four years of the death. Use form IHT38 to do so. Many people don’t realise they can claim back IHT if the property sells for less than it was valued at during probate. With house prices generally falling, thousands of people could still be able to claim back any overpayment.

Standard Life Aberdeen’s (SLA) giant Global Absolute Return Strategies (Gars) fund continues to haemorrhage assets as performance lags. Investors pulled a net £5.3 billion from Gars strategies over the first six months of the year, only slightly lower than the £5.6 billion outflow in the first half of 2017. The UK version of the fund was once the country’s largest, with assets peaking at nearly £27 billion in May 2016. But with assets having now fallen to £17.5 billion, it has fallen behind the £23.8 billion M&G Optimal Income fund.

Targeted absolute return funds were supposed to be a safe haven in times of turmoil, delivering positive returns even when markets were falling. In 2016 these funds attracted £5 billion. Investors are now voting with their feet and pulling billions of pounds out of the sector. They are angry that many of the funds have failed to deliver on their stated aim of absolute (more than zero) returns but are earning performance fees of millions of pounds for often very mediocre performance. If you still hold such funds, in the belief that they may recover, experts say this is the time to think about quitting.

Savers risk a £300 fine and further daily penalties if they dip into an old retirement pot and fail to tell their current pension provider – but it is unknown how many are falling into this obscure trap. Ex-Pensions Minister Steve Webb, who is trying to raise awareness of the penalty for not keeping your present scheme updated, made an unsuccessful attempt to find out how many people HMRC has fined since 2015. Other dangers of tapping old pots while still making ongoing contributions have been flagged by many financial experts. Savers who access any amount over and above their 25% tax free lump sum are only able to put away £4,000 a year and still automatically qualify for tax relief from then onward.

This is meant to prevent ‘pension recycling’ to gain a tax advantage – where people try to boost their retirement pot by generating extra tax relief. If you breach the £4,000 limit, known in official jargon as the Money Purchase Annual Allowance or MPAA, you could face a big tax bill down the line. And if you trigger the MPAA and don’t inform your current scheme within three months, you can also get landed with a £300 fixed penalty and a daily penalty of £60 a day. Steve Webb, now policy director at Royal London, had his Freedom of Information request on how many people have been fined for this failure knocked back by HMRC.

HMRC has been mailshotting thousands of UK landlords as part of its Let Property Campaign, suggesting it knows that they are not declaring the full tax they owe. Overseas landlords, many of whom are UK expats rather than wealthy foreign investors, are now coming forward in response to the campaign, which is designed to encourage landlords to voluntarily disclose to HMRC that they have not paid the full amount of tax on their rental income.

Over the last tax year, 397 overseas-based buy-to-let landlords admitted to HMRC that they had not been paying the tax on their rental income, up 61% on the 246 that came forward in the previous year, according to accountants Moore Stephens. If landlords do not respond within 30 days of receiving a letter from HMRC, they are liable to face penalties based on what HMRC believes they owe, or even criminal investigations for non-compliance.

HMRC is using its immense artificial intelligence (AI) database, Connect, to gather more information on landlords. Connect allows the tax authority to cross-check activity across innumerable information sources from property disclosures on tax returns to estate agents’ client lists and land registry data, as well as social media profiles and extraordinary spending patterns to identify instances of tax avoidance and evasion.

Inheritance tax could be due a major overhaul, with a report recommending sweeping changes to gifting rules, life insurance policies and even who pays the bill. After a request from the Chancellor of the Exchequer, the Office of Tax Simplification (OTS) conducted an extensive review into inheritance tax. Its new reports sets out clear recommendations for reforming the rules, which the government must now respond to.
You won’t necessarily have to pay inheritance tax, as the first £325,000 of an estate is tax-free. And if your home passes to your child or grandchild, the estate can be worth up to £475,000 in 2019-20 before tax is payable. Indeed, last year just 24,500 estates were landed with a tax bill, accounting for around 4% of all deaths in the UK. Yet while the number of people affected is small, the bills can be enormous, with a tax charge of 40%. Whether you’re planning your legacy, or dealing with an inheritance, it’s vital to know how the rules work.

Proposed changes include:
Shortening the time limit for taxable gifts
Changing who pays inheritance tax on gifts
Reforming IHT exemptions to gifts
Exempt all life insurance policies from inheritance tax
Remove the capital gains tax uplift
Review treatment of businesses and farms

There are more highly leveraged mortgages—those with high loan to value (LTV) ratios—being issued than at any time since before the financial crisis. Data from the Bank of England, released last week, showed that mortgages with LTVs greater than 90% constituted 18.7% of all lending in the first three months of 2019. That’s the highest level of highly leveraged lending in more than a decade, since before the financial crisis of 2008-09. These figures appeared in a report published by the central bank’s Financial Policy Committee, which monitors risks to the financial system. They collated data about lending product sales from the Financial Conduct Authority and the Bank’s own calculations. But highly leveraged mortgages allow borrowers to put down just 10% or even 5% of the purchase price of the property as a deposit. With average house prices at £229,431, that means they need just under £23,000, or just under £11,500 upfront. Traditionally, lenders charged more for these products than other mortgages, to reflect their lending risk. However, interest rates on highly leveraged mortgages have dipped recently, as lenders compete for business.
According to Moneyfacts, the average rate on a two-year fixed rate mortgage for 95% LTV loan have dipped from 5.35% to 3.25% over the past five years. And the number of highly leveraged mortgages on the market has risen too. There were just 149 fixed rate deals available to those with a 5% deposit in July 2014. Today there are 336. The data suggests that banks are loosening lending criteria a decade on from the financial crisis.