The focus now is on what happened in the 2025 Budget, but some of 2024’s changes have yet to take effect.
Changes announced in the Budget do not always take effect immediately or even at the start of the following tax year. As a result, they can be forgotten or ignored until they suddenly hit. A good example is the reform to the inheritance tax (IHT) treatment of unused pension funds on death. Currently, these are free of IHT in most instances, but from 6 April 2027, they will become taxed as part of the estate.
If you have plans to pass your pension savings on to your family and perhaps have limited withdrawals from your pension as a result, that strategy now needs to be revisited. It may still be appropriate, but for some it might be better to adopt a radically different approach, such as taking pension withdrawals and giving them to your beneficiaries. The complexities of the changes are such that individual advice is essential.
The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.
Occupational pension schemes are regulated by The Pensions Regulator.