Rachel Reeves has been accused of stealing a pensioner’s life-long plan for a happy retirement.

The consequences of the Chancellor’s “dreadful” move to charge Inheritance Tax (IHT) on pension pots passed on after death have been detailed in a letter written by a retired scientist who “planned and saved wisely” for their retirement.

Under the Budget changes, pension funds passed on to loved ones after death will be treated as part of the deceased person’s estate for IHT purposes and subject to the standard 40% tax rate above the £325,000 nil-rate band.

It is expected the Chancellor’s Budget proposals will apply to defined contribution pensions, which have been the most common pension type.

In a letter published by the Telegraph, the Leicester-born pensioner, 69, describes studying hard at school, being the first in their family to go to university and reaping the rewards of a “long and successful” career in science.

The writer says they retired aged 60 as they felt “worn out” by a demanding job, but “content” they had “planned and saved wisely” for the kind of retirement their parents never had.

Before the Budget, the pensioner says they would have paid £200,000 in IHT, but that has now shot up to £640,000, which they describe as “gut-wrenchingly unjust”.

To pile more misery on top of that, the writer explains how their children could face having to pay £360,000 income tax on the balance they inherit.

Mitigating against Ms Reeves’ IHT changes mean they should draw down money they don’t need only to spend it, sell their family home or give it to their children or emigrate “to save a fortune”.

The letter writer goes on to outline a “sinister” threat hidden in the Chancellor’s personal pension funds raid where dying before April 2027 would make their pension worth £800,000 more, as the changes would not apply.

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“Yep – this is exactly my situation, too. Thanks to this pensioner for explaining the situation. Labour have made a philosophical and moral …” 60

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If they died before April 2030, it would mean paying £440,000 IHT but leaving a pension pot worth £360,000 more because their children would not have to pay income tax on it.

But should they die after 75, then 40% would be lost in IHT along with 55% in income tax when the balance is drawn down, according to the writer of the letter.

They go on to say the state has “already taken its pound of flesh” after a lifetime of their paying taxes.

The writer adds: “Nonetheless, until your Budget, it had all been worthwhile; I’d enjoy my retirement and leave a legacy for my family, something my parents couldn’t do.

“But that has been stolen by a Budget that effectively punishes people for following the rules of working hard and saving diligently for retirement so that the state does not have to spend a penny to support them – someone who’s self-sufficient, to the very end.”