The UK government has abolished the two-year rule that imposed a tax burden on families waiting for pension benefit payouts. The move will remove a tax burden on families experiencing long delays to payouts that are beyond their control, including those caught up in the civil service pensions crisis.
Tax-free death benefits deadline axed for bereaved families
UKPulse Money DeskThe UK government has abolished the two-year rule that imposed a tax burden on families waiting for pension benefit payouts.
- Bereaved families will no longer face a tax charge if their loved one died before age 75 and the payment falls within their lump sum and death benefit allowance.
- The change is expected to take in £5million less tax in the rest of this tax year and £15million in subsequent years.
Why this matters: This change is expected to support bereaved families by removing a risk of unfair tax outcomes following bereavement.
What this means for you: If you are waiting for pension benefit payouts, this change may affect your tax situation. It is recommended to consult with a financial advisor to understand the implications of this change on your specific circumstances.