There has been a sharp increase in inheritance-tax bills. Britons paid £2.1bn of inheritance tax in the first quarter of the 2021-2022 tax year, £500m more than in the same period a year ago. The good news, however, is that your pension savings could help you cut your potential inheritance tax bill.

Pensions almost always fall outside your estate for inheritance tax purposes; they are not included in the calculation of whether your estate is worth more than £325,000, the level at which inheritance tax typically becomes payable.

Even better, the pension system makes it very simple to pass on unused pension savings to your heirs, particularly with defined-contribution or money-purchase plans. If you die before the age of 75, your heirs are entitled to all of the money with no tax to pay; if you die after age 75, your heirs still get the cash, but will need to pay income tax on it at whatever rate they normally pay. Even if you have used your pension savings to buy an annuity – an insurance contract paying you a regular income for life – you may still be able to pass on cash to your heirs. However, to do so, you must set the annuity up in the right way when you buy it, selecting options that allow you to pass on payments in the form of income or a lump sum.

Click here to read the full article 

GET IN TOUCH!


  MAIL US
enquiries@growthinvest.com

  CALL US
020 7071 3945

FOLLOW US ON


Throughout our site you will find links to external websites. Although we make every effort to ensure these links are accurate, up to date and relevant, we cannot take responsibility for pages maintained by external providers.