IHT only for rich, says Osborne

Chancellor George Osborne has hinted at future inheritance tax reform if the Conservatives win the 7 May general election.

In an interview with the Sunday Times on 11 January, Mr Osborne said: “David Cameron has made it clear, as have I, that we believe inheritance tax is a tax that should be paid by the rich and we will set out our further approach closer to the election.”

Referring to a reform taking effect from April 2015, he added: “I have taken steps to help with inheritance, making sure that people can pass on their pension.”

From April, people with a defined contribution pension who die before the age of 75 will be able to pass on unused pension to a beneficiary tax-free. Currently beneficiaries pay 55 per cent tax if they receive a lump sum from a pension where some money has already been taken out.

People with a defined contribution pension who die after the age of 75 will also be able to pass on unused pension to a beneficiary. When the recipient withdraws money from the fund, it will then be taxed at their marginal tax rate.

While the Conservatives’ plans for inheritance tax remain to be seen, a radical shake-up of the existing pensions environment – of which the reforms above form part – is now only weeks away.

The changes mean that from April, from the age of 55 people with defined contribution pension savings will be able to buy an annuity, take out all their pension savings in a lump sum or keep their pension pot invested and access it over time. The new regime will also provide enhanced tax benefits when access their pensions.

With this in mind, Moore Thompson will be holding a free expert seminar exploring the pension rules changes from 4.30pm on Wednesday, 15 April in the Function Suite, South Holland Centre, in the Market Place, Spalding.

Topics to be covered include:

  • what the changes mean in practice
  • pre-retirement issues, including the pensions lifetime allowance
  • maximising tax efficiency – contributions to personal and company pensions and the lump sum
  • making the right decisions for your retirement.

The event will include an opportunity to ask questions and will close at around 6.30 with a light buffet.

If you would like to attend, please contact Louise Hildred by Monday, 6 April 2015 atlouise@mooret.co.uk or 01775 711333.

Posted in Legal Press Articles.