Related Articles
UK households are re-evaluating their pension and estate planning strategies in light of an impending HMRC rule adjustment. From April 2027, proposed plans under the Labour Party government could result in pensions losing their inheritance tax (IHT) exemption.
Experts at Spencer Churchill Claims Advice have voiced concerns, stating: “Many people are understandably worried about how inheritance tax on pensions will be implemented, and some are looking to access their funds early before the changes take effect.”
The firm cautioned that while this might seem like a prudent move, it could lead to unforeseen financial repercussions, such as increased income tax bills and diminished pension security in later life. They warned: “A knee-jerk reaction to changing pension rules could do more harm than good.”
Instead of rushing to withdraw funds, the firm advises households to meticulously plan their estate strategy to minimise inheritance tax liability whilst ensuring they retain sufficient pension savings for retirement. The company also pointed out that surveys indicate 44% of respondents lack confidence in pension stability due to regular government policy alterations, reports Birmingham Live.
They further commented: “Frequent changes to pension taxation create uncertainty, making it harder for individuals to plan for their retirement with confidence. With pensions being a long-term investment, stability and clear guidance are crucial to ensuring people don’t make short-sighted decisions that could leave them financially vulnerable in later life.”
The spokesperson further remarked: “As the 2027 deadline approaches, pension holders [are urged] to take action now to ensure they maximise their retirement savings while mitigating unnecessary tax costs.”
This adjustment indicates that individuals might face the levy on funds they intend to leave to their beneficiaries upon passing.
Personal finance gurus point out that new research implies over half of Britons view their pension as a “key component of their estate planning”. They caution against hastiness ahead of the looming tax change, which could include taking substantial amounts out of pensions and potentially making “costly mistakes”.
