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Tax on inherited pension pot?
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Bellasfriend
Posts: 2 Newbie

Hello I have a pot of pension savings (it is part of an employer pension scheme at the moment), which I plan to use as 'drawdown' after I retire in about a year. I'm just trying to work out what would happen if I died. The whole of my estate would transfer to my wife and I know that will not be taxed. So what is left of the pension pot will transfer to her without inheritance tax. Will it then become part of her 'cash savings' allowing her to draw from it without paying income tax? Or will the opposite apply? Thanks if anybody can help.
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Pensions are outside of your estate, so make sure you have an Expression of Wish form (or your pension provider's equivalent) naming your wife as beneficiary should you die first......Gettin' There, Wherever There is......
I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple0 -
Assuming that your wife is named as the beneficiary, the pension pot will transfer to her.
If you die before age 75, she can withdraw all the money tax free although she does not have to do that straightaway if she does not want.
If you die after 75, she will pay income tax at her normal rate of any withdrawals.
Like all pension rules this may change in future.0 -
At the moment it depends on how old you are when you die.
If you die before 75 she can get it tax-free.
If you are 75 or over anything withdrawn from it will be taxable and will be added to her taxable income in calculating her tax due.0 -
Bellasfriend said:Hello I have a pot of pension savings (it is part of an employer pension scheme at the moment), which I plan to use as 'drawdown' after I retire in about a year. I'm just trying to work out what would happen if I died. The whole of my estate would transfer to my wife and I know that will not be taxed. So what is left of the pension pot will transfer to her without inheritance tax. Will it then become part of her 'cash savings' allowing her to draw from it without paying income tax? Or will the opposite apply? Thanks if anybody can help.
Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
Hi Marcon sorry for the delay. It is a defined contribution scheme1
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Bellasfriend said:Hi Marcon sorry for the delay. It is a defined contribution schemeGoogling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0
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Nebulous2 said:If you die before 75 she can get it tax-free.
If you are 75 or over anything withdrawn from it will be taxable and will be added to her taxable income in calculating her tax due.0
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