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Osborne to cut 'Death Tax'

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Staff writer ▼ | September 30, 2014
George Osborne
Good news   Inheritors to pay only a marginal tax

UK Chancellor George Osborne unveiled plans to cut the pensions 'Death Tax', at the Conservative Party conference.

Currently, inheritors are forced to pay a 55% tax on money left to them in "defined contribution" pensions by those aged 75 or over. But the Chancellor's plans will see inheritors pay only a marginal tax, or none at all if the person was under 75 and the pension was untouched.

The Treasury has estimated the policy, which will come into effect in April, will cost roughly 150m pounds a year. The government believes it will benefit around 320,000 people.

Outlining the plans, Mr. Osborne said: "People who have worked and saved all their lives will be able to pass on their hard-earned pensions to their families tax free.

"The children and grandchildren and others who benefit will get the same tax treatment on this income as on any other, but only when they choose to draw it down. Freedom for people's pensions. A pension tax abolished. Passing on your pension tax free. Not a promise for the next Conservative government - but put in place by Conservatives in government now."

Reacting to the Chancellor's speech, John Cridland, CBI Director-General, said: "The economic recovery is strengthening, but it's certainly not job done, so businesses will be buoyed to hear the Chancellor commit to an economic plan for the long-term. Investment in infrastructure, like runways, and in skills are the right choices to boost growth across the country.

John Allan, National Chairman, Federation of Small Businesses, said: “We welcome Chancellor’s strong sense of ambition and aspiration for the UK to be the best place to do business in the world, and for his clear backing for small businesses. His speech echoed many of our Manifesto’s proposals, with clear commitments to lower business taxes, and to boost growth outside London and the South East through investment in much-needed infrastructure.

Simon Walker, Director General of the Institute of Directors, said: “At the heart of the Chancellor's speech was a welcome recognition of the centrality of business and enterprise to every other area of government activity.

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