Pension rules change tax planning

Changes in the pension rules have resulted in a sea-change in tax planning, says the Financial Times.

Under the old rules, it made sense to draw money from a pension fund and keep other assets. But now that pension funds are exempt from inheritance tax, many people can substantially reduce their inheritance tax bills by keeping money in their pension funds and spending other capital. If someone dies before age 75, the entire fund passes tax-free to whoever they have nominated, and even though tax is payable on withdrawal from the fund if its owner dies after age 75, many inheritors such as grandchildren will be able to draw cash from the fund without paying any tax.
We expect many people to alter their Wills and their inheritance plans to take advantage of the new rules.