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6mo ago

Labour's Tax Reforms to Hit Unmarried Couples and Wealthy Estates

New inheritance tax rules will significantly impact pension savings and capital gains for unmarried partners and affluent families.

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Caption: Rachel Reeves plans to make pensions liable for inheritance tax (IHT) from April 2027 Photographer: Peter Dazeley Provider: Getty Images Source: The Image Bank RF

Overview

  • Unmarried couples will face a 40% inheritance tax on inherited pension savings starting in 2027, potentially reducing retirement income.
  • The new tax rules will also impose capital gains tax on asset transfers between unmarried partners, unlike married couples who are exempt.
  • Wealthy families could see up to a 70.5% tax on inherited pensions due to combined inheritance and income tax liabilities.
  • The changes aim to prevent pensions from being used as inheritance tax planning tools, affecting about 8% of estates annually.
  • Experts advise individuals to seek financial advice and consider adjusting retirement and estate planning strategies.