HM Revenue and Customs will cease offering tax relief on personal pension contributions once savers reach 75, reshaping retirement and estate planning perspectives for older individuals.
HM Revenue and Customs will stop granting tax relief on personal pension contributions once savers reach 75, a change that can make later-life retirement planning less generous and, for many schemes, less practical. The rule means the government no longer tops up personal payments after a person’s 75th birthday, and many pension providers will not take fresh contributions because the main tax advantage has fallen away.
According to Fidelity and MoneyHelper, people under 75 can usually receive tax relief on pension contributions up to the lower of their annual earnings or £60,000 a year, subject to the wider annual allowance rules. After 75, personal contributions are still possible in some cases, but they no longer attract tax relief. If someone is still working, an employer may continue paying into the pension, provided the payments meet tax rules.
The age threshold also matters for inheritance. Fidelity says that if a person dies before 75, beneficiaries can usually inherit pension savings without paying income tax or inheritance tax on those funds. If death occurs at 75 or older, withdrawals are generally taxed as income, although the money is not usually part of the estate for inheritance tax purposes at present. That is due to change from April 6, 2027, when unused pension funds and certain death benefits will be brought into the estate for inheritance tax.
Justin Rourke of Armstrong Watson said the shift at 75 affects not only contributions but also the treatment of pension wealth after death and access to tax-free cash. He said savers can still normally take a tax-free lump sum after 75, although the rules become more complicated and some providers may impose restrictions. For people approaching that birthday, the message from advisers is clear: pension, withdrawal and estate planning decisions may need reviewing well before the milestone arrives.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
