View more on these topics

AS 2014: Death tax on joint life annuities scrapped

Widowers will not have to pay income tax when they start taking annuity payments after their partner dies, Chancellor George Osborne has confirmed.

Delivering his Autumn Statement, Osborne says: “The 55 per cent death tax currently applies when you pass on an unused pension pot to loved ones will be abolished. People will be able to pass on their pensions to their loved ones tax-free.

“I can also tell the House today that we will ensure that people who die before the age of 75 with a joint life or guaranteed term annuity will be able to pass that on tax-free too.”

The Autumn Statement text confirms the tax cut only applies to annuity payments taken after April 2015.

At September’s Tory party conference the Chancellor announced pensions held in drawdown accounts and some type of annuity would be exempt from the pensions “death tax” if the member dies before the age of 75.

If the member dies after 75, the remaining pension is taxed at the beneficiary’s marginal rate of income tax or 45 per cent if taken as a lump sum.

But conventional annuities were not included in the original announcement, leading commentators to argue the Government was favouring drawdown over annuities through tax treatment.

Today’s announcement brings the retirement products back into line.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm