Labour's plan to tax unused pensions as part of inheritance tax is projected to raise far more than initially estimated. While the government predicted £640 million in the first year, new analysis suggests the revenue could exceed £3 billion annually by the 2030s and top £40 billion over two decades.
Labour estimated the change will bring in £640m in the first year but new analysis shows it is likely to be in the billions
The total yield from the change could easily exceed £40bn over the next two decades, according to the research. But under Reeves’s changes, unused pension savings could be taxed as part of your estate if it exceeds the IHT threshold.Following the introduction of pension freedoms in April 2015, there was a dramatic growth in the number of people transferring their traditional defined benefit pension schemes into a defined contribution pot.
“The surge in DB pension transfer activity which we witnessed in the late 2010s will dramatically increase the number of people whose estate includes a significant DC pension balance. LCP calculated the estimates based on a sample of schemes which it administers and based on the range of life expectancy of the people who transferred.
INHERITANCE TAX PENSIONS FINANCE TAXATION ESTATE PLANNING
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