Budget - October 2024

Todays Budget introduced two changes impacting pensions, the first relates to the treatment of pensions for inheritance tax purposes, the second relates to transfers to Recognised Overseas Pension Schemes.

Inheritance Tax

The Budget confirmed that pensions would be taken into account when determining inheritance tax from 6 April 2027, the Fund potentially pays two types of benefit on the death of a member.

For Adult Dependants and Eligible Children’s pensions payable from the Fund the position remains unchanged, these will not count towards inheritance tax and will continue to be subject to tax under PAYE.

Lump sums payable on death will be taken into account when determining any inheritance tax payable.  The Government has initiated a consultation with the pensions industry on the implementation of this change and we will publish updates as more detail becomes available.  In the meantime please continue to ensure that your Expression of Wish Form is up to date.

Transfers to Recognised Overseas Pension Schemes

With immediate effect the specific exclusion from the 25% overseas transfer charge on transfer to a Qualifying Recognised Overseas Pension Schemes (QROPS) established in the European Economic Area (EEA) or Gibraltar will no longer apply. A 25% tax charge will be levied unless one of the other exclusions apply, such as the individual being resident in the same country as that in which the receiving QROPS is established.

If you are considering a transfer to a recognised overseas pension scheme you should seek appropriate independent financial advice.