Govt may scrap inheritance tax on pensions

People dealing with wills and probate have been told that the government plans to do away with inheritance tax that is levelled on pensions.

Documents from the Treasury have shown that UK people who hold off drawing benefits as a result of poor health may not have to pay inheritance tax on their pensions.

"This is the right thing for the government to do because people may not be drawing on their benefits because they are trying to protect beneficiaries, not because they do not want to pay tax," financial planner Dennis Hall said.

At the moment, a pension fund can be subject to inheritance tax if its owner passes away prior to drawing on the fund.

In addition, a Institute for Public Policy Research report released last year argued that Britain's requirements are not suited to inheritance tax anymore and that a new system should be put into place. The study argued that the current system suffers from public discontent and falling revenues.

Published by Phil Hammond