From April 2027, grieving families will be required to pay inheritance tax on pensions due to government reforms. This move, announced by Rachel Reeves, is projected to generate over £1 billion annually for the Exchequer by the decade's end. Unlike initial expectations that pension providers would handle death duties, the responsibility will fall to estate executors. The government anticipates approximately 10,500 estates will face new inheritance tax liabilities. Public opinion points to significant opposition, with only 21% of Britons supporting this unpopular tax measure.
Grieving families will be forced to pay inheritance tax (IHT) on pensions after ministers decided to press ahead with reforms despite a fierce backlash. Rachel Reeves announced in last year's Budget that unspent pensions would be added to estates from April 2027 in a move that is expected to raise more than 1bn a year for the Exchequer by the end of the decade.
However, while it was previously thought that pension providers would be responsible for calculating and paying any death duties, HM Revenue & Customs has confirmed this will instead be the responsibility of the personal representative, or executor, of the estate.
The government estimates that around 10,500 estates will become newly liable for inheritance tax under the changes in 2027. Polling earlier this month found the move was the most unpopular tax measure announced by Labour since entering office.
Just a fifth of Britons (21 percent) supported the policy, while 44 percent expressed opposition to the measure, highlighting widespread unhappiness with the planned reforms.
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