How to Watch UK TV Channels Outside of the UK? I'll give you a simple trick that will explain how to watch UK TV channels live abroad. Now you can watch all of your favorite UK TV programmes while you are away from home without VPN with 1Fakt.com
Wealth planners and financial advisers report their phones are ringing off the hook with families desperate for answers to one burning question. How can we protect ourselves from tough new inheritance tax rules?
From April 2027, pensions will be ensnared in the inheritance tax net for the first time. If you have exceeded your allowances, whatever is left in your pension when you die could be taxed at 40 per cent.
But a new trick that could help some beat inheritance tax is emerging – which experts are only just starting to talk about. Some worry it is so advantageous they fear the Treasury may put a stop to it in time.
It allows those with large pension pots to pass them on to family members free of inheritance tax – in the form of an income they receive for the rest of their lives.
It uses annuities – financial products that have fallen out of favour for the past decade or so, but are starting to come back into their own. Annuities allow you to take a lump sum from your pension and use it to buy an income.
You can take one out just for yourself or opt for one that continues to pay out to someone else for their lifetime when you die. Savers abandoned them in 2015 when pensions freedoms granted them permission to keep nest eggs invested and to draw on them for an income. Savers liked the fact that, with this new option, anything left in the pot on death could be passed on free of inheritance tax.
But whereas lump sums left in pension pots could be liable for inheritance tax from April, those that have been converted into annuities will escape it.
For couples who are married or in a civil partnership, this is no great boon as they can pass assets between themselves free of inheritance tax anyway.
From next April pensions will be ensnared in the inheritance tax net for the first time. If you've exceeded your allowances, whatever's left in your pot when you die could be taxed at 40 per cent
Clare Moffat, of pension firm Royal London, says a joint annuity could be a good idea if you want your partner to get something when you die without having to pay inheritance tax
But Clare Moffat, of pension firm Royal London, says: 'If you are not married but want your partner to get something when you die – without having to pay inheritance tax – a joint annuity could be a really good idea.'
Some experts cautiously point out that there is no reason why you couldn't do the same with other family members.
For example, someone in their 70s with a pension pot could use some or all of it to buy an annuity for themselves and that continues to pay out to a grown-up child when they die.
That income will last for the grown-up child's lifetime. Though they will pay income tax on it, they won't be hit with inheritance tax.
Nick Flynn, from retirement specialists Canada Life, says: 'There's no reason why you can't take out policies for each child. The children would need to be grown up – at least 35 – when the policies are taken out, otherwise they would cost a fortune. But it could also be a good option if you would rather hand over an income than a lump sum that you fear they might spend on a Ferrari.'
The income you could get on an annuity with a younger family member would be far lower than one just for yourself or that pays out to a spouse who is a similar age because the policy is likely to pay out for decades longer. William Burrows, financial adviser and founder of independent advice platform Annuity Project, has run some rough numbers using figures for normal joint life annuities.
A 75-year-old could take a £100,000 pension pot and turn it into a joint annuity that pays out £6,094 for themselves and then to a 45-year-old son or daughter for the rest of their life.
Alternatively, they could take out one that starts at £3,279 but that rises with inflation each year. The starting income is much lower but Burrows suggests this may be advantageous.
He says: 'If you do not need your annuity income to live on, it may be better to start with a lower amount. Then, by the time your son or daughter gets the income, it will have increased.'
Pension firm Standard Life reports that 39 per cent of financial advisers expect annuities to become more popular due to the inheritance tax changes.
They are growing in favour among older customers with larger pots in particular. The proportion of quotes for customers aged over 75 has more than quadrupled since 2024, rising from 1.3 per cent to 5.5 per cent year-to-date in 2026.
That will also be in part because of another advantage annuities offer to families facing an inheritance tax bill.
One of the most generous inheritance tax exemptions is for gifts made out of surplus income. You can give as much as you like during your lifetime and it is automatically free of inheritance tax so long as you can show that you are giving out of income rather than capital, it doesn't affect your own standard of living and you are making the gifts regularly.
Pension pots can't be passed on this way, because they are considered capital, but they can if you convert them to an annuity and gift income regularly.
You will have to pay income tax, but consider the alternative. From April, pensions that attract inheritance tax will be subject to a 40 per cent levy. If you're 75 or over when you die, the recipient will also pay income tax when they draw from the pension.
That could result in up to £67,000 of £100,000 going in tax – £40,000 paid in inheritance tax and a further £24,000 in income tax on the remaining sum for those pushed into the higher rate bracket, or £27,000 for additional rate taxpayers.
Before you go off and snaffle an annuity, it's worth remembering that everyone's circumstances are different and no one-size solution fits all.
And also, once you have bought an annuity, you lose the possibility of growing a pot further with investment returns and the income ceases when those named on the policy die.
Finally, there is a good chance you don't need to worry about inheritance tax. Moffat says: 'If you're living on your pension and will pass it on to your spouse when you die, there may not be much left in the pot anyway.'