Autumn Budget 2024: Pensions to be subject to inheritance tax
Pensions will fall into an individual’s estate on death from April 2027
In the Budget of 30 October 2024, Chancellor Rachel Reeves announced that defined contribution pensions will become subject to inheritance tax (IHT) on the death of the pension holder from April 2027.
The current rules surrounding pensions on death have meant that some retirees have prioritised using other savings and assets to fund their retirement before touching their pensions.
What could this mean?
Further details on this are set to follow in due course, but it’s reasonable to assume that this change could mean more estates cross into the IHT threshold.
Gary Smith, Financial Planning Partner and retirement specialist at Evelyn Partners, comments: “Retirees and savers have 18 months to review their long-term plans. As defined contribution pension funds could now be subject to up to 40% IHT on death, we will probably see greater withdrawals from pension pots strategically with other taxable plans.
“Pension withdrawals are subject to income tax, so some savers in drawdown will have an eye on the frozen £50,270 threshold at which point their overall income from all sources will be taxed at 40%.”
Speak to Evelyn Partners about your financial plan
There have been significant changes announced in the Autumn Budget, which could have implications for your financial plan. That makes it a great time to speak to a professional about your situation, and at Evelyn Partners we have the experts who can help. You can speak to your usual Evelyn Partners contact, book a free initial consultation online, or call 020 7189 2400.
