New rules on pensions introduced in the draft finance bill yesterday may open up a new income source for charities, experts have said.
The proposed rule change would allow pensioners more flexibility to manage their money, rather than requiring them to buy an annuity, which means that many could have unspent money in a pension plan when they die.
This money could be left to a charity tax-free, but otherwise it would be taxed at 55 per cent, the rules laid out in the bill state.
Colin Kent, head of legacies at Christian Aid, said this would make an attractive target for legacy fundraisers. "The high rate of tax means this is one of the most tax-efficient ways of giving to charity," he said. "It will be something legacy specialists should look closely at."
"It gives charities access to a new source of funding that they haven't previously had," he said. "There are questions about how it will work in practice, such as will people leave money in their will or use some other system? But the principle is good."