Significant adjustments to Inheritance Tax regulations could lead to the potential depletion of your pension funds even if you have not yet reached the retirement age.
Under the current provisions, there is no Inheritance Tax obligation if you inherit a pension from an individual who passed away before turning 75. Conversely, if the individual deceases after the age of 75, you will be required to pay Income Tax upon commencing withdrawals from the inherited pension.
Starting from April 2027, inherited pensions will become subject to Inheritance Tax and will be encompassed within the deceased individual’s “estate,” which includes property, assets, and finances.
It has been confirmed that this regulation will apply even if the individual passed away before reaching the age at which pension access becomes permissible. Currently set at 55, this age threshold is scheduled to increase to 57 starting from April 2028. This development coincides with the DWP confirming a new Winter Fuel Payment deadline, urging pensioners to take action promptly.
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