“When saving in a pension, the vast majority of people are doing so to provide a retirement income, rather than to pass on an inheritance. Bringing accumulated pension funds or 'death benefits' into an individual's taxable estate on death would seem particularly harsh and unjustified.
“We need to encourage people to save more into pensions so creating a possible tax liability for ‘good behaviour’ would be highly counterproductive.”
Canada Life’s Jones has instead suggested that a quick win for the chancellor would be to remove the residence nil rate band and replace it with an increase in the standard nil rate band.
Jones said: “The residence nil rate band was introduced in 2017 as a way of the keeping an election promise but it introduced multiple layers of complexity and only favours those who own property and who have children – this is not fair in a tax system.
“As estate planning is often planned many years ahead of someone’s death any changes can impact existing arrangements. Care therefore needs to be taken with any potential changes as it could render perfectly bona-fide planning redundant meaning that plans would have to be revisited and it may no longer be possible to carry out someone’s wishes.”
amy.austin@ft.com
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