The Treasury and HMRC are reportedly looking at the removal of a ‘double tax break’ which currently enables families to inherit pension savings and not pay income tax or Inheritance Tax (IHT) on the proceeds. At present, families inheriting pension savings from somebody who dies before the age of 75 can withdraw funds and not pay any tax on the proceeds.
At the same time as a poll for the Sunday Telegraph suggested voters believe Inheritance Tax (IHT) to be the most unfair tax levied on UK residents, revised HMRC forecasts were suggesting that up to 50,000 more families would be faced with an IHT tax bill by 2028.
News that HMRC has pulled in almost £650m due to complex inheritance gifting rules in the past three years, has once again highlighted the need for careful estate planning by families. Whilst the overall tax receipts from Inheritance Tax (IHT) between April 2022 and February 2023 were £6.4 billion, the focus of this latest news is on the proportion collected as a result of gifts made by the deceased in the period leading up to their death.
If you’re in the process of writing a will or starting to talk to you family about what your estate looks like, then you may be asking yourself how you can reduce the amount your heirs will be paying in IHT.