Brits given inheritance tax advice

A chartered financial planner has spoken out to say that pensions are starting to become a popular method for freeing assets from inheritance tax.

Paul Dixon said that income drawdown pots will have their death duties reduced to 55 per cent from 82 per cent from next month.

This is not the only alteration in pension funds' tax treatment, he added. There are several other changes being introduced, such as it no longer being a requirement to purchase an annuity by the age of 75.

As a result of the new death benefit rules, estate planning strategies will have to be "completely" changed by wealthy income drawdown investors who are trying to reduce their inheritance tax liabilities by "running down their pots".

In addition, the Office of Tax Simplification is currently proposing tax breaks for trusts should be rethought as they are unfair. The organisation wants the loopholes that families use to reduce their inheritance tax bill to be examined.

Published by Hannah Carr