The government has said it will backdate legislation to prevent pension scheme members from being charged for inheritance tax (IHT) if they don’t drawdown all their funds before their death.
In today’s Autumn Statement (25 November) HM Treasury said the legislation, which would be included in the Finance Bill 2016, would apply to deaths on or after 6 April 2011.
Meanwhile Mr Osborne has said said that, after collecting evidence on this during the Summer, the government will not introduce new restrictions on how deeds of variation, can be used for tax purposes but will continue to monitor their use.
Julie Hutchison, savings and tax expert at Standard Life, said: “The decision not to introduce new restrictions on the tax consequences of using a deed of variation is good news.
“The majority of us don’t have wills, and even if we do have a will, we don’t keep it up to date.
“Against this background, it is extremely useful for loved ones to have the facility to alter how an estate is distributed within two years of date of death, without additional tax concerns.”
Claire Trott, head of pensions technical for Talbot and Muir, said: “Clarification that IHT will not be payable on drawdown funds not used before death, will be welcome clarity for some, that may have been concerned that they would be hit in addition to possible tax charges on death post age 75.”
Another change to IHT which was announced in the Autumn Statement was the exemption for compensation and ex-gratia payments to victims of persecution during the World War II era.
The legislation will apply to deaths on or after 1 January 2015 and will include payments made under a recently created compensation scheme known as the Child Survivor Fund.
