Chanceller Rachel Reeves conducted her first Budget todayPicture by Simon Dawson / No 10 Downing Street
A wide range of both defined benefit (DB) and defined contribution (DC) authorised pension death benefits will be included in the value of an individual’s estate for inheritance tax (IHT) purposes, a Treasury document reveals.
In today's (30 October) Budget, the government confirmed that pensions and death benefits passed on will be subject to IHT from 2027, with both DB and DC schemes impacted.
A technical consultation released alongside the Budget has revealed how wide-ranging the new rules are likely to be – with dependents' annuities and DB lump sum death benefits among those in scope.
The list in full is below.
Authorised pension death benefits to be included in the value of an individual's estate for IHT from 6 April 2027
Source: HM Revenue & Customs "Technical consultation - Inheritance Tax on pensions: liability, reporting and payment"
The HMRC consultation went on to note that, in most cases, the income tax treatment of the benefit would depend on the age of the member when they died.
It also said that all life policy products purchased with pension funds or alongside them as part of a pension package offered by an employer were not in scope of the proposed changes.
It added that any unauthorised payments made from a deceased member's pension fund would be in scope of IHT.
