With most workplace pensions due to attract inheritance tax (IHT) from 2027, what are the best options for Britain’s older generation?
In the Autumn 2024 Budget, it was announced that money left in a defined contribution pension will come under IHT, effective from April 2027. This includes all private pensions and most workplace pensions.
According to the Government, most people won’t be affected, and under 5% of 213,000 estates with ‘inheritable pension wealth’ will be liable in 2017-28. However, these figures are subject to external factors such as people hastening withdrawals from their pension funds.
There are different approaches people can take, and for those with cash, it may be tempting to spend more pension money now, helping younger family members, rather than see it taxed after their passing. There are different allowances people can use to donate tax-free gifts, worth up to £3,000 in a tax year, without it increasing the value of your estate.
Such decisions will invariably depend on the individual and their ability to sustain their finances post-retirement. Against this backdrop, some pension holders may choose to apply for an annuity package that guarantees a retirement income, or opt to take out equity release mortgages, which offer senior citizens the chance to cash in on their property without moving home.
If you are inheritance tax planning in Cheshire and need professional financial advice on safeguarding your future after 2027, get in touch with our specialist local team at Hartey Wealth Management today.
