Pensions1

Chancellor George Osborne's announcement in the Autumn Statement that he intends to allow people to pass on their Individual Savings Account benefits when they die to their partners is another sign of the government making savings vehicles more flexible, and is to be welcomed, according to senior financial planner, Norman Dalgleish.

The change means that the money you save in your ISA – protected from capital gains and income taxes – can remain in that tax-free environment after your death if you pass it onto your spouse or civil partner. Beforehand, the protection of the wrapper disappeared immediately on death.

The end result, like the changes announced in relation to pensions earlier this year, is that ISAs are now more useful in terms of planning how you will provide for your closest dependant after your death. For some people, it may now make sense for them to continue adding to, or slowdown the money they are taking from, their ISA even into older age.

The other main change announced adds to recent reforms in making pension saving fairer for those who die early. The government intends to let those who die under the age of 75 pass on the payments from any annuity they buy to their dependants without any income tax being levied. Like the previously announced changes, which will allow those who die under 75 to pass on their pension pot and any payments from it without incurring tax charges, this ultimately makes life fairer for those who save for their retirement, and means people can put money into a pension knowing they won't face a hefty tax charge if they die early.

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