As you will be well aware, from 6 April 2027 HMRC plan to include pensions in the deceased’s estate when it comes to assessing the value for inheritance tax.
It was announced on 16 December that Rachel Reeves was pressing pause on the second stage of the pensions review, a review that was expected to contain the long-awaited extension of auto-enrolment and measures to help the self-employed save for retirement.
As the year draws to a close it seems appropriate to keep with tradition and reflect on what has happened in a defining year for pension tax rules.
As we near the end of the year and look forward to 2025, it’s difficult not to reflect on the year to date. 2024 presented new challenges for the pension industry, most notably in respect of the implementation of the lifetime allowance abolishment and more recently, the announcement that from 2027, ‘unused’ pension benefits will be subject to inheritance tax.
Despite all the pensions-related fear and speculation that swirled around in the media during the weeks leading up to the Budget on 30 October, it was more of a case of ‘what didn’t happen to pensions’, rather than what did.
From a pensions point of view the biggest news from the Budget was undoubtedly the fact that from 6 April 2027, pensions will fall into the deceased’s estate and therefore be liable for inheritance tax.
I have recently returned from nearly two months away from anything to do with pensions (well, aside from deciding I need a bigger fund to spend more time in all the places we visited, once we don’t have the kids in tow!).
The first Labour Budget for 15 years takes place on 30 October.
Last year, a whirlwind of change hit the pensions industry as schemes and advisers raced to prepare for the removal of the lifetime allowance, while HMRC staff scratched their heads over exactly how it could be done before the end of tax year deadline, writes Beth Joslyn, of AJ Bell (standing in for Lisa Webster who is on holiday).
When the Labour Party launched its pre-Election Manifesto in June, the main pensions-related commitment promised, “…a review of the pensions landscape.”