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Find out more'Will my spouse get my pension when I die?'
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When I pass away, I’m planning on leaving half of my pension income to my spouse.
In the Autumn Budget, it was indicated that pensions will form part of a deceased person’s estate from 2027 for inheritance tax purposes.
Will those pension payments incur inheritance tax?
Eric from Sussex
'Your spouse can inherit tax-free - but others aren't so lucky'
Joanne Padilla, Which? Money expert, says...
Don’t worry: the pension income your spouse could inherit would not be subject to inheritance tax (IHT).
To recap: from 6 April 2027, when someone passes away their pensions and most pension ‘death benefits’ will be included within their estate for calculating whether inheritance tax is due, possibly resulting in a tax bill.
However, under IHT rules, you can leave assets to your spouse or civil partner entirely free of the tax. This will also apply to pensions left to spouses or civil partners.
The inclusion of pensions will push many estates over tax-free thresholds
Other readers may not be so fortunate. People who choose to leave pensions to their children will now need to consider their pension among the other assets they want to leave.
Given that there are several IHT allowances, it’s possible that no tax will be due. But the inclusion of pensions will push many estates over tax-free thresholds, so it’s worth reviewing your plans as soon as possible.
- Find out more: Ways to avoid inheritance tax
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