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South Wales Argus
6 days ago
- Business
- South Wales Argus
HMRC to tax pensions of workers who die before pension age
As part of last year's budget, it was announced that from April 2027, inheritance tax will be charged on pension pots for the first time. But, it wasn't clear if this would include the pensions of people who die before they turn 55 - the earliest date that they could have access their pension. HMRC has now confirmed that death duties will still be charged even if the worker died before they could spend any of their retirement savings. Under current rules that would mean pensions would be taxed at up to 40% if they are part of an estate that exceeds the inheritance tax threshold - currently £325,000. But, as Martin Lewis explained in a video, posted on his Twitter feed, Inheritance Tax is paid by relatively few people: "This is a tax there are so many misunderstandings about. Most people, when they die, their estates will not pay inheritance tax. This is primarily a tax that only affects the most affluent households." Near retirement? There's a huge tax trap to avoid when withdrawing from a pension. This is my simple video analogy but always get 1-on-1 free guidance from PensionWise first. This is just a titbit, watch my full Pension special on: — Martin Lewis (@MartinSLewis) January 29, 2025 And Paul Barham, Tax Partner at Forvis Mazars says that many are using the allowances up until any rule changes to Inheritance Tax (IHT) occur: "Pensions can be a valuable tool when passing down wealth because they sit outside your estate for IHT purposes and as of April 2023, the lifetime allowance has been removed, so there is no limit on how much you can save over your lifetime. "If you have assets inside and out of a pension plan, you'll want to consider when to draw down from your pension and whether to also consider using non-pension assets to meet the full cost of everyday life." He adds: "Inheritance planning is notoriously complex. But there are advantages to starting earlier than you think is necessary. Seek the support of an adviser that you trust and one that you think will have your best interests at heart. While no one really wants to think about the need to pass on wealth, it can be of great benefit to your loved ones to get plans in place early." Recommended reading: Any changes - even if they only hit the wealthiest taxpayers - have not been popular with the Conservatives. Speaking to reporters on the Isle of Wight, leader Kemi Badenoch said: 'Unemployment is up, growth is down, inflation is up, cost of living is putting a real squeeze on people's pockets. 'And it's because of Rachel Reeves's budget last year. I'm very worried about what's going to come in the next budget. 'We're seeing tax rises, even taxes on pensions, as potential solutions'
Glasgow Times
6 days ago
- Business
- Glasgow Times
HMRC to tax pensions of workers who die before pension age
As part of last year's budget, it was announced that from April 2027, inheritance tax will be charged on pension pots for the first time. But, it wasn't clear if this would include the pensions of people who die before they turn 55 - the earliest date that they could have access their pension. HMRC has now confirmed that death duties will still be charged even if the worker died before they could spend any of their retirement savings. Under current rules that would mean pensions would be taxed at up to 40% if they are part of an estate that exceeds the inheritance tax threshold - currently £325,000. But, as Martin Lewis explained in a video, posted on his Twitter feed, Inheritance Tax is paid by relatively few people: "This is a tax there are so many misunderstandings about. Most people, when they die, their estates will not pay inheritance tax. This is primarily a tax that only affects the most affluent households." Near retirement? There's a huge tax trap to avoid when withdrawing from a pension. This is my simple video analogy but always get 1-on-1 free guidance from PensionWise first. This is just a titbit, watch my full Pension special on: — Martin Lewis (@MartinSLewis) January 29, 2025 And Paul Barham, Tax Partner at Forvis Mazars says that many are using the allowances up until any rule changes to Inheritance Tax (IHT) occur: "Pensions can be a valuable tool when passing down wealth because they sit outside your estate for IHT purposes and as of April 2023, the lifetime allowance has been removed, so there is no limit on how much you can save over your lifetime. "If you have assets inside and out of a pension plan, you'll want to consider when to draw down from your pension and whether to also consider using non-pension assets to meet the full cost of everyday life." He adds: "Inheritance planning is notoriously complex. But there are advantages to starting earlier than you think is necessary. Seek the support of an adviser that you trust and one that you think will have your best interests at heart. While no one really wants to think about the need to pass on wealth, it can be of great benefit to your loved ones to get plans in place early." Recommended reading: Any changes - even if they only hit the wealthiest taxpayers - have not been popular with the Conservatives. Speaking to reporters on the Isle of Wight, leader Kemi Badenoch said: 'Unemployment is up, growth is down, inflation is up, cost of living is putting a real squeeze on people's pockets. 'And it's because of Rachel Reeves's budget last year. I'm very worried about what's going to come in the next budget. 'We're seeing tax rises, even taxes on pensions, as potential solutions'
The Herald Scotland
6 days ago
- Business
- The Herald Scotland
HMRC to tax pensions of workers who die before pension age
HMRC has now confirmed that death duties will still be charged even if the worker died before they could spend any of their retirement savings. Under current rules that would mean pensions would be taxed at up to 40% if they are part of an estate that exceeds the inheritance tax threshold - currently £325,000. But, as Martin Lewis explained in a video, posted on his Twitter feed, Inheritance Tax is paid by relatively few people: "This is a tax there are so many misunderstandings about. Most people, when they die, their estates will not pay inheritance tax. This is primarily a tax that only affects the most affluent households." Near retirement? There's a huge tax trap to avoid when withdrawing from a pension. This is my simple video analogy but always get 1-on-1 free guidance from PensionWise first. This is just a titbit, watch my full Pension special on: — Martin Lewis (@MartinSLewis) January 29, 2025 And Paul Barham, Tax Partner at Forvis Mazars says that many are using the allowances up until any rule changes to Inheritance Tax (IHT) occur: "Pensions can be a valuable tool when passing down wealth because they sit outside your estate for IHT purposes and as of April 2023, the lifetime allowance has been removed, so there is no limit on how much you can save over your lifetime. "If you have assets inside and out of a pension plan, you'll want to consider when to draw down from your pension and whether to also consider using non-pension assets to meet the full cost of everyday life." He adds: "Inheritance planning is notoriously complex. But there are advantages to starting earlier than you think is necessary. Seek the support of an adviser that you trust and one that you think will have your best interests at heart. While no one really wants to think about the need to pass on wealth, it can be of great benefit to your loved ones to get plans in place early." Recommended reading: Any changes - even if they only hit the wealthiest taxpayers - have not been popular with the Conservatives. Speaking to reporters on the Isle of Wight, leader Kemi Badenoch said: 'Unemployment is up, growth is down, inflation is up, cost of living is putting a real squeeze on people's pockets. 'And it's because of Rachel Reeves's budget last year. I'm very worried about what's going to come in the next budget. 'We're seeing tax rises, even taxes on pensions, as potential solutions'
BBC News
10-06-2025
- Business
- BBC News
Laura Pomfret on Pensions
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Yahoo
11-05-2025
- Business
- Yahoo
Less than half of pensioners aged 65-75 ‘confident their savings will last'
Less than half (48%) of people aged 65 to 75 are confident their private pension savings will stretch for the rest of their life, research indicates. The survey, for Aviva and Age UK, took place among 1,000 people in this age group who are on a moderate retirement income, excluding people who only receive the state pension and those with more than £20,000 in annual household income from a defined benefit (DB) salary-related pension. Those taking part in the survey, carried out by consultancy Ignition House in October and November 2024, said they did not pay for financial advice. More than four-fifths (83%) said an income for life from their private pension savings has become more important to them as they get older, and the same number said they would be worried if their retirement income fell – with women more likely to feel this way than men (87% compared with 79%). Two-thirds (65%) of those surveyed do not believe there is enough support for people managing their financial needs as they age. Aviva and Age UK said the research highlights the 'pressing need' for regular financial reviews within retirement. They suggested that a 'mid-retirement MOT' could offer pensioners guidance and support while they are in retirement andwould act as a financial and lifestyle review that could include a conversation about estate planning, fraud protection, access to state benefits, and managing finances if they start to experience cognitive decline. Over-50s can access free guidance from the Government-backed Pension Wise service. Doug Brown, chief executive of insurance, wealth and retirement at Aviva, said: 'Pensioners today clearly value financial security, but many seem to be sleepwalking into later retirement with a set and forget approach to their retirement income.' Paul Farmer, Age UK's chief executive, said: 'We frequently hear from struggling pensioners, many of whom have a small private pension of their own, about how tough they have found the last few years. 'Managing your pension and other finances becomes harder as you get older – especially where people have suffered a major life-change like a bereavement or a dementia diagnosis. He added: 'The mid-70s is often a point where people need to take stock and think through their options.'
