In response to the Chancellor's Autumn Statement announcement, Neil Messenger, Head of Wealth Advisory at business and financial adviser Grant Thornton UK LLP, comments:
"This is fantastic news for all savers regardless of their age or wealth, as it protects the valuable tax-free benefits that they have worked hard to build.
"For those left behind after their spouse passes away, life is traumatic enough without the burden of additional tax reducing their income and making their tax affairs more complicated.
"A prudent saver who used their annual tax-free saving allowance over the years (using PEPs and ISAs) may have accumulated funds in excess of £1million. If used for income, this could typically give them £40,000 per year, based on a 4% yield – this income is free from tax. For a higher-rate taxpayer this gives a tax savings of up to £16,000 per year. On the saver's death, the surviving spouse would previously have been subject to tax on this income, this is now tax free. A great outcome for those who have worked hard to save for their family's future."