People who save their pension funds and then die can pass their pension funds onto their heirs. In the past, the funds were often subject to a 55% tax, depending on the age of the deceased and whether or not money had been withdrawn from the pension fund. The chancellor, George Osborne, eliminated the tax on pensions, regardless of the age of the deceased and the state of the fund cialis 10mg generique. The new policy goes into effect in April of 2015.
The elimination of this tax means that beneficiaries will be not be taxed as heavily. However, if the beneficiary decides to liquidate the pension fund rather than keep it as a pension, typical income tax rates apply to that money as an income.
Pensions are not considered part of a person’s estate and therefore have never been subject to IHT, inheritance tax. The standard IHT continues to be at 40% after the exempt amount of £325,000 per person.
This is a surprise move from the chancellor and many people will be very happy about it. It will prompt countless people to put their money into a pension so that their beneficiaries can avoid the IHT. Residential property is part of an estate and cannot be put into a pension directly. There may be creative ways to put money from a property into a pension, but the property itself can’t be added to the pension.
People who are lucky enough to receive “final salary” or “defined benefit” pensions do not pass their benefits to their children. Therefore, the elimination of 55% tax does not affect their children.
The change in tax code will affect how people invest in their pensions. It will also affect how people choose to withdraw the inheritance from pensions.