Currently when a saver dies they must pay a 55 per cent tax charge to pass their drawdown fund to their loved ones. The only exception has been for under 75 year olds who have not touched their pension. Only spouses and dependent children under the age of 23 have been able inherit their pensions without paying a tax charge.
But from next April anyone inheriting pension cash from someone who dies before the age of 75 will not have to pay any tax at all. Those who inherit a pension from a loved one who passes away after the age of 75 will pay tax on money they withdraw at their normal rate of income tax. For many people this can be as little as 20 per cent. If they however withdraw a one off lump sum tax at 45 per cent will be levied.
It is important to remember that he shakeup applies only to savers who keep their money invested in the stock market and use their pension funds for income, using a method known as income drawdown which allows people to drawdown cash as they require it, instead of using their pension pot to buy an annuity. If these changes are turning your financial planning upside down Enables’ IFA’s of Bishop’s Stortford are here to help you get things in order.
Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE
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