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Death tax to be abolished, says Chancellor

29 Sep 2014

At the Conservative Party conference, Chancellor George Osborne will announce plans to scrap the 55% tax applied to pensions upon a person’s death.

Under the current rules, any pension bequeathed to savers’ relatives is subject to tax 55% in the case of those aged 75 or over, and the marginal rate of around 20% for those who die younger. The policy is intended to save hundreds of thousands of savers up to 150 million a year.

Mr Osborne is expected to say: ‘People who have worked and saved all their lives will be able to pass on their hard-earned pensions to their families tax free.

‘The children and grandchildren and others who benefit will get the same tax treatment on this income as on any other, but only when they choose to draw it down.

‘Freedom for people’s pensions, a pension tax abolished, passing on your pension tax free. Not a promise for the next Conservative government, but put in place by Conservatives in Government now’.

The new rules are expected to come into force from April 2015.