22 July 2025
Sacker & Partners LLP (Sackers), the UK’s leading specialist law firm for pensions and retirement savings, today responded to the Government’s confirmation that unused pension funds will be subject to inheritance tax (IHT) from April 2027.
In time for the summer break, the Government has confirmed that unused pension funds will form part of an individual’s estate for IHT purposes from 6 April 2027 and have issued draft Finance Bill clauses designed to make this happen.
Claire Carey, partner, comments: “On the cusp of the summer recess, the Government has confirmed that it is pressing ahead with plans to bring unused pensions in scope of IHT. From an individual perspective, it is worth bearing in mind that existing exemptions and nil rate bands will mean that the majority of estates will not, ultimately, be subject to IHT. However, at a time of increasing regulatory burden, the new measures will impose additional obligations on pension schemes, not least by increasing information flows between them and personal representatives.”
“However, there is some good news. Originally, there was uncertainty around whether death in service benefits payable from a registered pension scheme would be caught. Designed to compensate for the loss of an individual’s income at an incredibly difficult time, no doubt to the industry’s collective relief, the Government has now confirmed that they will be excluded from its IHT proposals, alongside dependants’ scheme pensions from DB or collective money purchase arrangements.”
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