Government presses ahead with plans to bring pensions into IHT net
Despite alternative solutions being put forward, interactive investor comments on a ‘hugely disappointing update’.
22nd July 2025 12:41
- Grieving family members inheriting a loved one’s unspent pensions may face serious delays and additional costs from April 2027 onwards
- However, ii welcomes the confirmation that death-in-service benefits and dependants’ pensions under defined benefit schemes are to be excluded from calculation.
Commenting, Craig Rickman, pensions expert, interactive investor, says: “It’s hugely disappointing the government is pushing on with plans to bring pensions into the inheritance tax net by 2027, despite being warned about considerable problems with the proposals. Alternative solutions were presented to the government at no detriment to its fiscal targets, which would’ve eased the burden on surviving loved ones. It’s a real shame these have not been taken on board.
- Invest with ii: SIPP Account | Stocks & Shares ISA | See all Investment Accounts
“While confirmation that death-in-service benefits won’t fall under the scope of IHT is a welcome development, the proposals entering draft legislation remain fraught with issues, risking lengthy probate delays and additional costs, which may cause unnecessary distress to grieving family members.
“Consumers are already altering their behaviour ahead of April 2027, in some cases making pension withdrawals sooner than previously intended in fear of loved ones being hit with exorbitant tax bills and facing an administrative maelstrom. This could not only lead to poorer outcomes in retirement, but damage trust and confidence in a pension system that is already on shaky ground. Furthermore, savers might be extracting and passing on money from their pensions that they need to meet future financial responsibilities, such as to cover the cost of care.”
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.