9th March 2015
The abolition of the 55% death tax charge on unused pension pots may be the signal that a significant revamp of inheritance tax (IHT) is in store in the Budget on 18 March claims NFU Mutual.
Despite many reliefs and exemptions, inheritance tax still remains deeply unpopular and there have been many calls to increase the threshold from £325,000 to at least £1m.
Ahead of the Budget, Sean McCann, chartered financial planner at NFU Mutual believes that given the UK is now only weeks away from the General Election, it is likely the Chancellor George Osborne will want to woo voters with another landmark announcement to follow last year’s seismic changes to pensions and Stamp Duty.
McCann said: “The Chancellor could look at an inheritance system similar to the Irish model where, rather than taxing someone’s estate, the person or people inheriting would be taxed instead. This approach would bring inheritance tax more into line with the new rules on pension pots.”
From 6 April, tax on pension pots for those 75 and older will be charged to the beneficiaries. For everything else, inheritance tax is still charged on the estate rather than the recipient.