IFS calls for overhaul of favourable IHT/pensions position

Institute says reforms could raise revenue and cut income tax avoidance

Martin Richmond
clock • 3 min read

An overhaul to the tax treatment of pension pots after death would improve the fairness of the taxation system, according to the Institute for Fiscal Studies (IFS).

The IFS's Death and taxes and pensions report - published today (15 December) - found defined contribution pensions are being increasingly used by savers to bequeath their retirement savings after death. The research found if all pension funds which remained in pots after death were subjected to a basic rate of income tax, combined with a minimum rate of income tax on withdrawals, this could prevent pension funds withdrawn by non-income taxpayers from avoiding paying income tax. The institute has called for pensions to be included in the value of estates at death for the purpose of IH...

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