Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of equalising taxation rules on inherited pension pots when a pension holder dies (a) before and (b) after the age of 75.

The primary purpose of a pension is to provide income, or funds on which individuals can draw, in retirement. If an individual dies before they get to use it for that purpose, the Government believes their beneficiaries should be able to have the funds. However, the Government does not want pensions to become a vehicle for inheritance tax planning. Therefore, once an individual is 75, they will be able to pass these funds on to others in a flexi-access drawdown account or as a lump sum, but the recipient will need to pay their marginal rate of tax on them.

The age of 75 is a feature of the existing pensions tax system. It is the age at which individuals stop receiving tax relief on pension contributions and at which most people will bring or will have brought their pension into payment.

As ever, the Government keeps all aspects of the tax system under review, as part of the annual Budget process, and in the context of the wider public finances.