Britons taxed to death

FIVE-MINUTE GUIDE TO... RACHEL REEVES' PENSIONS TAX RAID

- By Harvey Jones

THE government should be actively encouraging people to save for retirement. Instead, Chancellor Rachel Reeves is treating our pensions as a cash cow, with plans to slap inheritance tax (IHT) on them when we die.

If her proposals go ahead, families could soon face being taxed twice on the same pension pot following the death of a loved one.

Under Budget proposals due to take effect from April 2027, any unused money left in a defined contribution pension when you die could be dragged into your estate for IHT purposes.

That means it could face a 40% tax charge if your total estate exceeds the threshold.

And the Chancellor doesn't stop there either. After paying that, beneficiaries could still be taxed again, with income tax on any money they withdraw from the inherited pension charged at their own marginal rate.

The total combined tax bill could hit a staggering 64% for many families. In a handful of cases, depending on the estate and who inherits the money, the tax take could rise to 90% or more.