Inheritance tax bombshell could hit grieving | U.Ok.Finance News
Some of the UK’s largest employers are reportedly taking a look at whether or not to scrap a pension benefit, which pays out lump sums to the households of staff who die whereas in service. Pensions consultancy, WTW which advises some of the UK’s largest corporations, mentioned 87% of purchasers it had spoken to have been now reviewing the so-called death-in-service benefit, in preparation for upcoming modifications to inheritance tax.In her maiden Budget, Reeves mentioned any unused pension funds and death advantages shall be subject to Inheritance Tax (IHT) however the Firefighters Pension Advisory Scheme (England) was reported as have written to HMRC warning that households of its members who die on responsibility would discover themselves with a big tax invoice.The modifications introduced in by Reeves are as a consequence of come into impact on 6 April 2027, however the chancellor has been consulting with pension suppliers and consultants on how to introduce them.Kate Smith, head of pensions at Aegon, mentioned the pensions industry can be urged the Chancellor to not ‘shoehorn’ unused pension and death advantages being shoehorned into the Inheritance Tax regime.She mentioned: “This is unworkable and riddled with issues. IHT is already complex, and including pensions within the regime makes it even more so.”Smith mentioned HMRC to discover easier options, comparable to levying a tax on pensions in scope the place above a sure degree.”For instance, the primary £100,000 of unused pensions on death can be inherited free of the new pension tax charge. This additionally has the added benefit of avoiding encouraging people to run down their pension too rapidly to keep away from an IHT charge.“If HMRC does proceed with its proposals and tries to retrofit pensions into the IHT regime, we imagine a quantity of elementary modifications are needed.Helen Perrin, head of financial planning UK at WTW mentioned employers have been reviewing their preparations in anticipation of the modifications coming in.
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