British finance minister George Osborne has unveiled plans to scrap a tax on inherited pension savings from April 2015.

Osborne will abolish a 55% tax levied on pension pots of savers when they die. The proposal will save people thousands of pounds that they would otherwise have lost as tax.

Under the new proposal, if a person who dies is 75 or over, beneficiaries will only pay their marginal tax rate or no tax at all if the deceased was under 75 and the pension is left untouched.

However, only spouses and financially dependent children under the age of 23 are exempted from the charge.

The government estimates that the reforms are likely to affect 320,000 people and is expected to cost a total £150 million each year. The changes are designed to make it easier and cheaper for people to withdraw money directly from their pension pots.

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By GlobalData