TaxPersonal TaxArguments rage over inheritance tax looophole

Arguments rage over inheritance tax looophole

A tax loophole to pass on pensions lump sums to heirs to be closed

Arguments over the closing of a tax loophole relating to pensions has
continued to rumble over the weekend.

Chancellor Gordon Brown introduced a charge to
effectively stop people using alternatively secured pension schemes to pass on
lump sums and avoid inheritance tax.

Advisers said the move discouraged saving and was a charge hitting those not
avoiding tax.

‘The chancellor is cutting his nose off to spite his face,’ MacIntyre
Hudson’s Patrick King told the
Sunday
Times
.

‘He has become obsessed with tax avoidance, even though compared with the
alternative of an annuity a family pension appears to involve no tax loss to the
Treasury at all.’

However letters to the Financial Times today
said that the tax relief available on building up pensions meant that allowing
funds to be passed onto heirs without a penalty was wrong.

‘That these people and the professional advisers should defend a loophole
that permits such tax-subsidised funds to be passed on to heirs without penalty
is grotesque,’ said Graham Cox.

Further reading:

Chancellor uses PBR to close religious
pensions loophole

PBR 06:
Personal tax predictions

Business welcomes cancellation of filing date alignment

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