Overview
- Financial Secretary Lord Livermore told the House of Lords the change takes effect on 6 April 2027, bringing most unused pension funds and death benefits into estates for inheritance tax.
- Government papers set out that pension scheme administrators, not heirs, will be liable to report and pay any inheritance tax due on pensions to HMRC.
- Advisers report a rise in estate-planning enquiries and urge savers to review beneficiary nominations and consider drawing down more in retirement rather than leaving large untouched pots.
- Experts warn that interactions with tapered allowances and other charges could yield very high effective rates for a small number of very large estates, with scenarios cited up to 87%.
- Official figures show inheritance tax receipts reached a record £8.2bn in 2024/25, while media reports say ministers are discussing possible limits on gifting and a review of potentially exempt transfers.