Belmayne Warns Pensioners to Consider New Tax Rules

Dronfield-based financial planners, Belmayne, are urging people to review their inheritance tax (IHT) planning, now the new rules on how pensions will be treated have been clarified.

The independent firm near Sheffield warns significantly more savers will be drawn into the IHT regime, as unused pension funds and death benefits are to be included in a deceased’s estate from 2027.

Alex Napier, Belmayne financial planner, said: “In last autumn’s budget, the government announced changes to the IHT rules to incorporate pension funds. Following a much-anticipated consultation, we now know how this will work. It is estimated the new rules will impact around 213,000 estates each year, with affected families likely to see their tax liabilities increase by an average of £34,000.”

The new IHT rules apply to unused pension funds, lump sum death benefits from defined contribution schemes and certain uncrystallised pension savings. Annuity guarantee payouts and spousal pensions remain unaffected.

Alex added: “This is the most significant change to UK estate planning since the introduction of pension freedoms and will fundamentally affect how wealth is passed to the next generation. Many individuals who weren’t expecting their estate to trigger IHT, now find themselves in a very different position.

“We believe anyone with pension savings should be consulting a financial planner to assess how the changes will impact their estate. There are tools available to us to help mitigate the damage, such as pension withdrawals that carry a lower tax rate, gifting, insurance cover and tax/trust planning, but this requires a full understanding of the client’s circumstances. By putting a new plan in place, we can ease the financial and administrative burden on bereaved families and reduce the complexity and stress of settling an estate.”

To find out more about the inheritance tax planning advice offered by Belmayne, telephone (01246) 298181, visit: www.belmayne-ifa.com or follow the firm on X, @belmayneifa.