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Chancellor George Osborne to cut 55% pension tax


The Chancellor will abolish a 55% “death tax” that currently applies to untouched "defined contribution" pension pots left by those aged 75 or over.
This means that when someone who has been saving for their pension dies and they would like their family to inherit their pension ,they will only pay the marginal income tax rate, or no tax at all if the deceased was under 75 years old and the pension is left untouched.

The measures, which are to be announced at the Conservative party conference Birmingham, will be in place from April 2015, a month before the general election. The proposal will save people thousands of pounds that they would otherwise have lost as tax, the treasury has said.

George Osborne said “We are not cutting a tax, we are removing one altogether. 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.

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.”

There are some critics of the announcement, Chris Leslie, Labour’s shadow chief secretary to the treasury, said: “George Osborne claims he has fixed the economy, but he’s only fixed it for a privileged few.”
This announcement comes after the recent blow to the Conservatives, MP Mark Reckless defection to UKIP happening just before the party conference.

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