Can You keep Your Pension From Incurring Inheritance Taxes

In the past, savers are told to put away as much as they can for retirement. They did that, and things went well until they unfortunately passed away. Their heirs would get the pension, but they would have to deal with a tax of 55 per cent. This left the heirs with substantially less than what they deserve. There have been some changes made to pensions that could allow heirs to inherit the pension tax-free.

Beneficiaries will pay any taxes based on their own income tax level, rather than the oppressive 55 per cent tax rate. If the person who passed on is under the age of 75 there will be no tax at all to pay. Another change is that the pension can be passed on to grandchildren, not just the children of the deceased.


The change was made effective since April 2015, and benefits families that would have otherwise had to pay an immense amount of tax. The previous tax scheme basically gave half the pension back to the Government, something that wasn’t a good outcome for anyone.

Keep in mind that if you’re purchasing an annuity, the rules still apply. The capital is almost always lost upon death, so keep this in mind if you’re trying to leave something behind for your loved ones.

Mr. Osborne had many reasons for changing the current law to freeing these pensions from taxes. Indeed, the push for pension freedom has come to a fever pitch across the country, with many people looking to leave as much as they can for their loved ones. From every angle, it definitely makes sense. If you’ve spent your whole life saving up for retirement and you happen to have money left over, why not pass it on to your loved ones?

The Chancellor also wants to encourage people to keep saving money in pensions, instead of going to annuities. In fact, these changes are almost certain to make annuities a thing of the past. The Chancellor already declared that buying an annuity isn’t a requirement anymore, as savers can just tap their pension funds directly. Unrestricted access to retirement savings is definitely a good thing, as it allows people to make different decisions based on their unique situations. From every angle, this is definitely a good thing. However, there are some industry concerns that unrestricted access may mean that people spend through their pension too quickly, leaving them with diminished options compared to earlier periods of their lives.

Be sure that you’re still writing a proper will that designates where this money is supposed to go. Otherwise, it’s a good time to start looking at your pension pots and determine how you’re going to move your funds!

Short Term Loans for Bad Credit – It’s a Reality

The year is almost coming to a close, which means that it's not a bad idea to take honest inventory of your financials. How are you doing? Is everything taken care of? Do you feel pinched as you go from month to month? Are you having some … [Continue reading]

Better Together Doesn’t Mean Zero Tax Code Changes!

If you're just tuning into the post-referendum news, let's bring you up to speed: Scotland's residents voted "No" on Scottish independence, preferring to stay within the UK. If you're looking at the tax deadlines this year, you might want to know … [Continue reading]

Extra £1,800 Needed a Year by 2015 to Pay Off Credit Cards

As if leaving the weekend behind and making the commute to work on a rainy day wasn’t enough, a report in The Telegraph is now telling us that an average household will need to earn an extra £1,800 a year by 2015 to be able to pay for the interest on … [Continue reading]

Handling Business Tax in the UK

New businesses are under the same regulations as established companies. In other words, saying to the HMRC that you "didn't know" there would be business tax to pay just isn't going to cut it. If you really want to know what type of taxes you're … [Continue reading]

The New ISA Limits Are Here – And Here’s How to Use Them to Your Advantage

Saving has been a hot button topic around the country for a long time. Just how do you save when wages are falling and the cost of living is rising? HMRC announced in March that the ISA limits were changing. Now that we've had a few months to see … [Continue reading]

Watch Out for these Common Mistakes

Do you know that you can save money when filing your taxes? Most of you still make common mistakes that cost money when filing taxes. By avoiding these simple mistakes, it is very easy to save money on taxes and get maximum tax return possible. What … [Continue reading]

Could Tax Transparency Schemes Be Coming Your Way

Taxes aren't high on the UK consumer's list of favorite things, but it's absolutely compulsory. So you need to be aware of any changes that could be possibly coming your way. The truth is that today's bit of news affects the countries that are … [Continue reading]

Limited company contractors – what you need to know about tax

While operating as a limited company contractor is the most tax efficient way of working on a freelance basis, it is unfortunately not as simple as merely registering as a limited company and choosing to pay less income tax and National … [Continue reading]

PAYE Tax Changes You Need to Know About

UK taxpayers got a real bombshell last Saturday -- they learned that the Pay As You Earn (PAYE) information has to be reported in real time. This is done by the employer, so you might not be aware of how this affects you. We wanted to chime in with … [Continue reading]