The Government’s planned pension tax changes which will punish millions of savers must be dropped

Tomm Adams, Partner said:

While I am keeping everything crossed for a reversal of the Government’s plans to bring pensions into scope of inheritance tax from April 2027 at the Spring Statement, it has been treated, including by HMRC, as not up for debate.

This poorly conceived policy change penalises prudent savers and their loved ones through double taxation. Many people are now scrabbling to change their entire long-term financial planning approach in an attempt to protect the value of their savings before it’s too late.

There will be a massive impact on unmarried elderly couples. If someone dies and their partner needs full-time care, then the funds in their pension can help to pay for that care. The costs of care are already set to rise due to the increase in employer’s National Insurance Contributions (NICs) and the National Minimum Wage (NMW) and reducing the money in that pension under inheritance tax means taking money away that could be used for care costs.

Tomm added:

If the Government is genuinely only looking to prevent the wealthy using pensions to pass on ‘excess’ personal wealth tax-free, then they should only levy inheritance tax on pension funds over a certain value – perhaps it could be linked to the lump sum and death benefit allowance which is currently just over £1m.

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If you have any questions about the above, please get it touch with your usual Blick Rothenberg contact or Tomm using the form below.