HMRC issues warning to anyone who has stashed away 'retirement savings'

New HMRC charges have put people's retirement savings "at risk". Retirement savings are "under threat" after the announcement that pensions will be subject to inheritance tax (IHT) from 2027, according to research from Charles Stanley Direct.

Just over a quarter of investors (26%) said they plan to draw down money from their pension pots “as early as possible” to use it more tax-efficiently, a new survey shows. But Rob Morgan, chief investment analyst at Charles Stanley, said: “Clear risks arise when pensions are drawn down prematurely or contributions are reduced.

“Decisions made without forensic attention to detail and consideration of all long-term outcomes can lead to unfortunate consequences in retirement.” Mr Morgan said: “The Labour Party Chancellor’s decision to include pensions within the inheritance tax umbrella is affecting investor behaviour already, two years before the changes come into effect.

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“With IHT tax thresholds frozen until 2030, it’s natural that families consider how to best protect their wealth as a greater proportion of estates become liable to the tax.” However, he added: “With each individual having their own desired outcome for their estates, it’s vital that professional financial advice is sought so that they can have the right plan in place.”

The survey found that just over a quarter (26 per cent) of 'DIY investors' planned to withdraw money from their pension as early as possible to use it more tax-efficiently. Twenty-one per cent planned to withdraw money from their pension and gift it to their family.

And 18 per cent planned to spend their pension pot faster to remove it from their estate. The changes could mean that, depending on whether inheritors are basic, higher, or additional rate payers, they will pay a combined 52, 64, or 67 per cent IHT and income tax on inheriting an individual's pension, provided the combined assets are over the IHT "nil-rate band" of £325,000.