GEORGE Osborne will today make a bold election pitch by announcing that potentially hundreds of thousands of Scots and millions of Britons will benefit from a decision to scrap the punitive 55 per cent tax on death charged when people pass on their pension pots to loved ones.
Pension experts say the Chancellor's policy announcement, to be made in his conference keynote speech, will boost pension savings and allow young beneficiaries to use their inheritance to get on the housing ladder or pay college fees.
The proposal is due to become operational just a month before next May's General Election and follows the radical pensions shake-up in Mr Osborne's spring Budget when he freed up people's ability to access their pension pots.
Under the new rules, from April, if the person who dies is 75 or over, beneficiaries will only pay their marginal tax rate, usually 20 per cent, when they draw down the income, as they would with any pension.
But if the person who dies is under 75, there will be no tax to pay at all. In his address, the Chancellor is due to say: "People who have worked and saved all their lives will be able to pass on their hard-earned pensions to their families tax-free.
"The children and grandchildren and others who benefit will get the same tax treatment on this income as on any other but only when they choose to draw it down.
"Freedom for people's pensions. A pension tax abolished. Passing on your pension tax-free.
"Not a promise for the next Conservative Government but put in place by Conservatives in Government now."
Government sources explained that hundreds of thousands of people could benefit each year. Annually, around 320,000 people retire with defined contribution pension savings. They and their families could all potentially be able to benefit from these changes.
In total, some 12 million Britons have some form of defined contributions pensions saving.
This policy will form part of the calculations in the Autumn Statement and is expected to cost around £150 million per year.
Pensions expert Ros Altmann said: "This is another great piece of news for pension savers. Instead of having to pay a punitive 55 per cent tax charge, they will be able to pass on any money left in their pension funds tax-free to their loved ones.
"Those who inherit pension funds can choose to keep it as a tax-free pension or they can just pay income tax on it and spend the money perhaps to help them onto the housing ladder or with education fees. Retirees will have a real incentive to keep money in their pension funds now that the threat of a 55 per cent tax penalty is being removed. This makes pensions more attractive than ever before."
On the economy, Mr Osborne is also expected to say: "The idea that you can raise living standards or fund the brilliant NHS we want or provide for our national security without a plan to fix the economy is nonsense.
"It's the economy that builds houses. It's the economy that creates jobs. It's the economy that pays for hospitals. It's the economy that puts food on the table.
"That's why it's the economy that settles elections. And the Conservatives are the only people in British politics with a plan to fix the economy."
Labour's Chris Leslie, the Shadow Chief Secretary to the Treasury, said: "George Osborne claims he has fixed the economy but he's only fixed it for a privileged few at the top.
"While millionaires have got a huge tax cut, working people are £1,600 a year worse off under the Tories. And pensioners are paying more in tax because of George Osborne's VAT rise and the so-called 'granny tax' which abolished the age-related tax allowance for the over 65s."
He added: "Labour's economic plan will tackle the cost-of-living crisis, get more homes built and balance the books in a fairer way."
Meanwhile, Scottish Conservative leader Ruth Davidson yesterday got a thumbs up from David Cameron as she told the Tory conference that the referendum "sent a tremor through the fabric of this nation and the echoes of that tremor will last a lifetime".
She said new powers for Scotland had to include a new responsibility for Holyrood to raise what it spends, so there could be "no more free passes, no more false promises … and no more cries of 'only with the powers of independence.'"
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