IHT tax receipts hit highest level on record as families face growing estate planning challenge

Maike Currie, vice president of personal finance at PensionBee, said: “The latest tax receipts figures come at a significant moment for tax policy. With Andy Burnham beginning his premiership against a backdrop of stretched public finances, an ageing population and rising demands on public spending, attention is increasingly turning towards how accumulated wealth will contribute to future tax revenues.

“For some households, pensions have done two jobs: providing an income in retirement while also helping pass wealth to the next generation. Bringing most unused pension funds within the scope of inheritance tax from next April changes that equation and is prompting many people to rethink both their retirement and estate planning.

“Andy Burnham inherits difficult public finances and a nation fatigued by a high cost of living challenge. He has already hinted at reviewing the long-running freeze on the income tax personal allowance as he looks to find ways to ease pressure on UK households. For some families, pensions could also become subject to both inheritance tax and income tax. Depending on when someone dies and who inherits their pension, beneficiaries may face inheritance tax on the estate and then income tax when they draw money from the pension.”