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HMRC Reveals New Details on Pension Tax Rule Changes Which Could Affect Millions
HMRC said schemes may withhold up to 50% of death benefits while tax bills are settled, and 10,500 estates will be affected.
- HM Revenue and Customs confirmed that from April 2027, unused pensions will count toward inheritance tax, with schemes authorized to withhold up to 50 per cent of death benefits until tax bills are settled.
- Announced by Chancellor Rachel Reeves in the 2024 Budget, the reforms aim to prevent individuals from using pensions primarily as inheritance tax planning tools, treating retirement savings as a standard revenue stream for the Treasury.
- Maike Currie, vice president of personal finance at PensionBee, warned that executors may become "pension detectives" tasked with tracking down accounts while coping with bereavement, calling the situation "an admin nightmare."
- With funds potentially locked up for up to 15 months, Neil McCoy-Ward noted families may be unable to cover funeral costs, while critics have accused the government of "sinking to a new low" with the 40% tax charge.
- Exemptions for transfers to spouses and civil partners will remain in place, and the government is expected to provide ongoing guidance throughout 2026 to help providers prepare for the overhaul.
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Total News Sources18
Leaning Left0Leaning Right1Center16Last UpdatedBias Distribution94% Center
Bias Distribution
- 94% of the sources are Center
94% Center
C 94%
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