Death taxes scrapped as part of efforts to win over savers

SAVERS were offered a helping hand in the Autumn Statement with the scrapping of ‘death taxes’.

George Osborne has offered savers help

The Chancellor announced that spouses will be able to inherit money saved in an individual savings account (ISA) without paying tax on it.

The Government said 150,000 people a year currently lose out on the tax advantages of their partner’s Isa after their partner’s death, even if they were saving as a couple.

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Mr Osborne also that the 55 per cent tax levied on unused pension pots when someone dies will be scrapped.

In future, pension pots will be passed to spouses tax free.

The Treasury confirmed the savings limit for ISAs will increase again in 2015 to £15,240.

“We are delivering fairness for savers,” Mr Osborne told MPs.

The Government is acutely aware of the need to be seen to be helping savers after years of low interest rates and rising prices which have devalued the spending power of savings and pension pots.

Pensions expert Ros Altmann said: “Anyone who has already bought joint-life annuity, which is a minority of people, but nevertheless significant, could be better off as a result of this change. The majority of past annuity purchases, however, were single life products which will not benefit.

“Most importantly though, these new rules, coupled with the new pension guidance, should help ensure more people cover their partner as well as themselves when buying a lifelong pension income.”

There was also good news for higher rate tax payers as the Chancellor promised the scheduled rise in the personal allowance next year would be passed on in full to those paying the 40 per cent rate.

The announcement means the point at which the higher rate kicks in will increase from £41,865 this year to £42,385 next year.

Mr Osborne described the move as a “down-payment” on the Government’s commitment to raising the higher rate threshold to £50,000 by 2020.

The Chancellor also set out measures to target those trying to “aggressively avoid” tax.

Mr Osborne said the Government would be taking action against special share schemes used to disguise earnings and the payment of benefits in lieu of salary and increasing charges on “enveloped properties”.