Pensions could be hit with a tax raid under suspected proposals to change retirement policy which could be unveiled in the upcoming Autumn Budget.
It is understood that pension pots could be made liable to inheritance tax in a move analysts are claiming “wouldn’t be very popular”.
Retirement plans are usually exempt from the HM Revenue and Customs (HMRC) ley because they are not considered part of an individual’s estate.
Despite this, there are exceptions to this rule which could mean pensions are liable to pay inheritance tax.
These include: If someone moves funds from their pension into a savings or current account; If someone makes large contributions to their pension while seriously ill and did not live for two years; If someone made contributions to someone else’s pension fund; If someone’s pension fund is not part of a trust arrangement.
Becky O’Connor, the director of Public Affairs at PensionBee, warned that changes to pension tax rules could have detrimental consequences.
She explained: “Bringing defined contribution pensions into someone’s estate for inheritance tax purposes would remove a key advantage that pensions have over other forms of long-term investment for those who are focused on tax efficiency.
“Income tax is already due on pension income for those who pass away after the age of 75.
“Making pensions liable for inheritance tax too could start to make them less attractive from a planning point of view and potentially dissuade people from saving into them.”
Do you trust Rahcel Reeves not to raid your pension via tax? Vote now in the poll above and have your say in the comments section below.
