View more on these topics

Lump sum death benefit charge confirmed

Tax-Taxation-Blocks-700.jpg

Lump sums paid to beneficiaries will be taxed at the recipient’s marginal rate from next year, the Government has confirmed.

Under the changes to the treatment of pensions on death announced at last year’s Autumn Statement, the Government announced pensions in drawdown would be taxed at the beneficiary’s marginal rate if the member died over 75.

However, savings passed on as a lump sum would be taxed at 45 per cent.

Yesterday’s Budget document confirms the 45 per cent will still apply for this year, before changing to be taxed at the marginal rate of the recipient from 2016/17. The change will be included in the Summer Finance Bill 2015.

Pensions in drawdown, or in joint life or value-protected annuities are passed on tax free if the saver dies before the age of 75.

The changes to the pensions ‘death tax’ has been roundly welcomed by advisers and the industry as savers are expected to keep money in pensions for longer as a result.

However, pension provider AJ Bell this week called for the Government to equalise the treatment of adult and child dependants. Under current rules, child beneficiaries must spend down pensions before the age of 23 and risk facing potentially huge tax bills.

Recommended

Mark-Barnett-MM-700.jpg

Mark Barnett: A three-point strategy to beat low growth

Equity markets have produced decent returns since the lows of the first quarter of 2009. There have been good reasons for this recovery: fears of a depression at the time proved exaggerated, interest rates have been kept close to zero, bond yields have collapsed and there has been a huge amount of quantitative easing by […]

George-Osborne-Serious-500x320.jpg
4

Budget: Govt extends pension tax relief cut

The Government has expanded its expected reduction to pensions tax relief for people earning less than £150,000. Originally the Government had indicated people earning over £150,000 would see their annual allowance tapered to a minimum of £10,000. This is to fund an increased inheritance tax threshold to £1m for couples. It was not clear how […]

Five ways to invest in the connected world

Smart utility metering; fitness trackers; connected cars; smart factories; precision agriculture: the internet of things encompasses myriad applications. But how do you gain exposure – and profit – from this growing trend, asks Neptune fund manager & CTO Ali Unwin. Read more: Important information Investment risks Neptune funds may have a high historic volatility rating […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment