Richard Curtis looks at the Chancellor’s Autumn Budget 2024 Budget proposal of a fundamental change to the inheritance tax treatment of pension funds.
A basic principle of pensions has been that tax relief – on premiums paid, the fund itself and the lump sum when the pension was taken – encouraged saving for a pension to supplement the state scheme.
However, in 2015 a further relief was given, in that it became possible for the individual to bequeath a pension to beneficiaries without it being included in their estate for inheritance tax (IHT) purposes. The effect for some was that, in retirement, rather than use their personal pensions, they would supplement their state pension income by drawing from other savings and capital that would be liable to IHT on death.
In her October 2024 Budget, the Chancellor of the Exchequer, Rachel Reeves, proposed to end this tax benefit. The Budget Report
