The tax charged on pensions passed onto loved ones after death is to be slashed.
George Osborne will today (Monday) confirm a sharp reduction in the so-called pensions 'death tax', the rate applied to pension pots which are passed on to loved ones after death.
At the moment if you die and your pension passes on to your loved ones, the money is subject to a whopping 55% tax rate.
This will now change from April 2015. If the person who dies is 75 or over, then the inheritors will pay their usual rate of income tax when they withdraw the money. Should the deceased be under 75, no tax will be charged at all.
This tax change will cost the Government an estimated £150 million a year.
The move is just the latest in a series of pension revamps announced by the Government this year. It has already handed pensioners more freedom to use their pension pots as they please, removing the need to purchase an annuity.
It should also improve the mood at the Conservative Party Conference, which has got off to an awful start with the defection of Mark Reckless MP to UKIP, while Brooks Newmark, the minister for civil society, has been forced to resign due to tabloid revelations about his private life.