Pensions shake-up

KEY POINTS

• Tax advantage of reducing other income and drawing pension taxed at basic rate.
• Little or no income tax if pensions left to beneficiaries.
• Difficulty of planning when rules might change again.

The rules about pension funds and how they can be drawn are undergoing radical change. In July the government confirmed how the changes will work in practice and further changes were announced at the Conservative party conference.

These have now become law with the Taxation of Pensions Act having received royal assent on 17 December 2014 taking effect in most cases from 6 April 2015.

This article is primarily focused on the taxation of pension benefits in particular the position on death because that is where the most radical changes have been proposed. As ever careful tax planning...