22 November 2023
If you are covering the government backing down on plans to tax inherited pensions when someone dies under the age of 75, please see comment from Jon Greer, head of retirement policy at Quilter:
“Today’s Autumn Statement confirms a reprieve for the taxation of inherited pensions where a member died before the age of 75. HMRC had previously confirmed in the summer that individuals who died with uncrystallised funds before age 75 and used those to provide beneficiaries with pensions via drawdown or annuity would be taxable. Fortunately, the government has confirmed that such pensions will remain tax free from April 2024 - a continuation of their current treatment.
“This is good news. If the government had gone ahead with the change to the tax treatment there would have been an incentive to take remaining funds as lump sums which are tax free up to the available lump sum and death benefit allowance, which will stand at £1,073,100.
“This confirmation means that there will be a similar treatment following the abolition of the Lifetime Allowance, albeit the amounts that can be used to provide beneficiaries’ pensions tax free appear to be unrestricted in their tax-free status. We look forward to seeing the fine detail in the Finance Bill.”
