Changes in the taxation of Pensions

Changes in the taxation of Pensions

Current Rules Proposed Rules
Death before age 75, from funds that have not been accessed
Tax-free lump sum Tax-free lump sum
Taxable pension income Tax-free pensions income
Death before age 75, from funds that are in drawdown
Lump sums taxed at 55% Tax-free lump sum
Taxable pension income Tax-free pensions income
Death after age 75
Lump sums taxed at 55% Lump sums taxed at 45%*
Taxable pension income Taxable pension income

 

*proposed to change to the marginal rate of income tax from 2016/17