Tax reduction to pension benefits on death
At the Party Conference this week, the Government announced changes to the tax which needs to be paid on the death of an investor who has used the Drawdown method to extract income from a money purchase pension fund.
From April 2015 if the investor dies before age 75 the remaining funds will be returned to the beneficiaries free of tax regardless of whether or not the scheme is in drawdown. From age 75 the fund on death will be taxed at a rate of 45% rather than the current 55% and payments taken as pension will be taxed at the recipient’s marginal rate. These changes should encourage investors to keep their funds invested and to gradually draw down benefits rather than denuding their funds in the first few years of retirement. Planning how to take retirement benefits is a complex matter, Nicholls Stevens have been advising clients on these matters for over 25 years
Widows and widowers rights improved.
If a spouse dies without leaving a will that is dying intestate, a change in the law which comes into effect from 1 October 2015 means that the surviving widow or widower will now be eligible to inherit a larger part of the estate. If the couple are married with no children, the spouse will inherit the entire estate however high in value. If there are children the spouse will automatically inherit the first £250,000 and 50% of the balance, with the remainder passing to the children. This means
that the position of the spouse has been considerably improved.
However, even with these improvements in the intestacy rules, readers should still aspire to write a will which allows you to write down your exact wishes as to how you wish your estate to be distributed. This is particularly important if you are in a long term relationship but are not married or in a civil partnership. Without a will your estate will pass to your closest blood relatives and your partner will receive no benefit. Nicholls Stevens offer clients access to a will writing service or recommend you consult your Solicitor on the matter of drawing up a will.