Inherited pension tax on Treasury’s agenda
Changes are being considered to inherited pensions that could see the removal of generous tax breaks.
No tax is paid currently by those who inherit an untouched pension pot from someone who died before the age 75.
This allows the beneficiary to invest it and withdraw a regular income without paying any tax. Those who inherit a pension from someone who died after 75 must pay income tax on regular withdrawals.
The government is looking to remove the age limit .
It announced in last year’s Budget that the lifetime allowance — a £1.07 million ceiling before being subject to tax chargeson withdrawals — is being abolished in April. The Treasury has now turned its attention to inherited pensions.
Tom Selby from the investment platform AJ Bell told The Times: “The rules are still to be finalised in legislation and at this stage it is not 100% clear exactly how pension assets will be treated on death.
“This needs to be clarified urgently so that pension savers can make informed decisions based on the planned rules, albeit those rules could yet be re-written if a future government changes pension legislation again.”