'I'm a finance expert - here's how to dodge Rachel Reeves latest tax raid on pensioners'

Rachel Reeves unleashed a imaginable £34,000 taxation raid connected pensioners yesterday (Image: Getty)

Rachel Reeves unleashed a imaginable £34,000 tax raid connected pensioners yesterday with the chancellor hammering families and businesses with a bid of punishing measures.

The chancellor delivered the highest taxation hike successful past with an eye-watering £40 cardinal raid connected the federation successful a Budget dubbed by Rishi Sunak arsenic of “broken promises”.

As portion of the caller measures, grieving families successful the UK look losing £65,000 each twelvemonth owed to a alteration to Inheritance Tax rules.

Under existent rules, pensions are exempt from Inheritance Tax and are not assessed arsenic portion of a person’s property worth erstwhile they die. But Reeves has committed to closing this “loophole” from April 2027 to bring them nether the Inheritance Tax regime.

The chancellor delivered the highest taxation hike successful past (Image: Getty)

It means that pensions that are passed onto household members erstwhile idiosyncratic dies volition beryllium taxed likewise to different inherited assets successful the future.

In the Budget, the Government said it was “removing the accidental for individuals to usage pensions arsenic a conveyance for inheritance taxation planning”.

Advisors are informing that the alteration means families volition person to rethink their inheritance planning.

Clare Moffat, of Royal London, has recovered a perchance useful loophole that tin assistance radical dodge the taxation raid done gifting.

She told The Telegraph: “You could beryllium taking wealth retired of drawdown and if you’re not spending it, you could beryllium gifting. If you were taking £50,000 of drawdown a year, but lone spending £30,000, you tin acceptable up a regular outgo to idiosyncratic from your income.

“So if you’ve got a kid who’s moving you could wage £10,000 a twelvemonth into their pension, oregon you could wage into a grandchild’s Isa.

“This is unlimited, but it lone works if it’s a regular outgo and doesn’t springiness you a poorer modular of living.”

Martin Willis, of consultants Barnett Waddingham, said: “The question is present if radical are supra the pension age, bash they commencement to instrumentality wealth retired astatine their marginal complaint of taxation and enactment it into different forms of trust, oregon support it wherever it is?”

However, Mr Willis warns that anyone reasoning of making a alteration to their program should get proposal beforehand successful bid to debar a costly “knee-jerk reaction”.