Significant alterations to Inheritance Tax regulations indicate that your pension funds might be accessed before retirement age due to recent changes.
Currently, if you inherit a pension from someone who passed away before turning 75, no Inheritance Tax is owed. However, if the individual dies after the age of 75, Income Tax is applicable when withdrawing money from the inherited pension.
Starting April 2027, inherited pensions will be subject to Inheritance Tax and counted in the deceased person’s “estate,” which encompasses property, assets, and funds.
It has been confirmed that this change applies even if the individual passed away before reaching the pension access age, currently set at 55 and increasing to 57 in April 2028. This development coincides with DWP confirming a new Winter Fuel Payment deadline with a call for pensioners to take action immediately.
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Inheritance Tax does not apply to death in service payments. An HMRC spokesperson informed <a class="TextLink_text-link__dBSS0 TextLink_enabled__dJF3l" href="https://www.pensionsage.com/pa/IHT-on-p
