Experts say big tax bills could result from Rachel Reeves’ move in the Budget
Bringing pensions within inheritance tax from April 2027 will result in a “massive increase” on the tax bill for the estates of wealthy UK pensioners, according to pension experts. In the Budget, chancellor Rachel Reeves announced that she would remove a “loophole” that left pension funds exempt from inheritance tax and increasingly allowed them to be used as intergenerational wealth transfer vehicles. The government estimates the move will raise £1.
The Institute for Fiscal Studies think-tank said this resulted in a “bizarre situation” where pensions were treated more favourably by the tax system as a vehicle for bequests than as a retirement income product. More and more people had also been expected to exploit the loophole in coming years as defined contribution pension pots grew following reforms in 2015 that gave savers more choice over what to do with their pensions.
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