Will beneficiary FAD be taxed as income or not?

benjaminfabi

Hi,

At the end of this Techzone article:

https://techzone.abrdn.com/anon/public/pensions/life-after-lta?opendocument&utm_campaign=ADV-TEC-Eligible-03082023&utm_medium=email&utm_source=Eloqua&utm_content=CSLAR000000163808

It says:
The draft legislation issued just covers the new rules for lump sums. However, the accompanying policy paper highlights a significant change to the taxation of pension income. From 2024/25, pension income will always be taxable. Consequently, inherited drawdown and annuities purchased from uncrystallised funds where the member died pre-75 will become taxable.

Here is the policy paper:
https://www.gov.uk/government/publications/abolishing-the-pensions-lifetime-allowance/abolition-of-the-lifetime-allowance

Simple question - where does it say what Techzone says it says? I feel like I'm going mad here 😂

les_cameron

Should have read this instead :-) https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/lifetime-allowance-abolition-from-2024

The policy statement did in fact say that - last para in detailed proposals section

Ministers have yet to decide. We'll find out around Autumn Statement time as I think they'll need to announce it to get it into the bill (late November / early December)

benjaminfabi

Ah okay thanks. So it's worded as a removal of the income tax exemption currently given to beneficiaries of a bce5c/d.

I had read the draft legislation from start to finish more than once and didn't see it referenced, and clearly didn't pay enough attention to this sneaky little sentence in the proposal!!