An update from the Autumn 2024 budget
Following the Autumn Budget 2024, the Government has proposed some changes that could affect how your pension is taxed after you die.
It has been proposed that from April 2027, any unused pension savings or lump sum death benefits may be included as part of your estate and therefore may be subject to Inheritance Tax (IHT).
Currently, the threshold amount before your estate might be liable to pay IHT is £325,000, unless you are leaving your estate to your spouse, civil partner or a charity. The threshold may increase to £500,000 if you’re passing your home to your children. This includes adopted, foster and stepchildren.
Just now, in most cases, pensions aren’t included when calculating the value of the estate before IHT is applied. However, if the proposal goes ahead, any pension benefits you have not yet accessed after death and any death lump sum benefits are expected to be included.
Do I need to do anything?
There’s no action you need to take at the moment. The proposal is going through a consultation process, and we’re waiting for further guidance from the Government regarding any future changes that will take place.
If the proposal goes ahead, it could affect how your pension savings are treated after death, and it may be beneficial to speak to a financial adviser who can help you to understand what this means for you.
If you’re looking for financial advice, the Trustee will pay for you to have one round of financial advice from Origen Financial Services (subject to eligibility). While Origen has been appointed by the Trustee, they will provide you with impartial advice based on your personal circumstances. You can find out more in the Retirement options section of the website.
Alternatively, you can also choose to use your own independent financial adviser. You can find a list of registered advisers on the MoneyHelper website or you can check the FCA register.
We’ll keep you updated with any new information as soon as it’s available. If you’d like to find out more about the current rules on IHT and pensions, please visit the Government’s website.