The Chancellor, George Osborne, has brought forward the expected announcement on the tax charge that applies to certain individuals’ pensions on their death.
The new rules will simplify the existing regime and come into force from April 6th 2015, abolishing the 55% tax that applies to untouched defined contribution pension pots of people aged 75 or over, and to pensions from which money has already been withdrawn.
This means that from April 6th 2015, if a person who dies is 75 or over, the person who receives the pension pot will only pay their marginal tax rate as they draw money from the pension. If someone aged under 75 dies, the person who receives the pot is able to take money from the pension without paying any tax.
Beneficiaries will be able to access pension funds at any age and the lifetime allowance, currently £1.25 million, will still apply.
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