Pension tax changes could leave families facing huge care home bills if they do not undertake careful inheritance tax (IHT) planning with deprivation of assets a clear risk, warns Lisa Morgan, partner at Hugh James
The overhaul of pension tax will see unused defined contribution pension pots become subject to inheritance tax (IHT) from April 2027.
The move has prompted a surge in older people withdrawing large sums from pensions and gifting money to children and grandchildren in an attempt to reduce future tax bills.
But councils are becoming far more aggressive in investigating whether people have deliberately given away assets to avoid paying for care, known as deprivation of assets.