When quizzed about forthcoming changes to Inheritance Tax on pension contributions, Labour’s Work and Pensions Minister, Sir Stephen Timms MP, said he “wasn’t sure” what the Conservative MP “was referring to.”
Rachel Reeves announced in the Autumn Budget that, from April 2027, pensions would be taxable under changes to Inheritance Tax.
Currently, if you die aged 75 or over your loved ones will pay tax on your pension at their personal income tax rate. Under the Government’s new plans people will pay a 40% tax on their pensions above the threshold.
According to official data from the Office for Budget Responsibility (OBR), 153,000 estates will be subject to the tax once Labour's new rules are in place. Government estimates suggest the change will raise almost £1.5 billion by 2030.
In a debate on the Social Security Up-rating Order, an annual statutory instrument which cements uplifts to State Pension in line with the Triple Lock, Conservative MP Dr Luke Evans raised the looming IHT changes. “The new Government are making changes to inheritance tax and where pensions fall,” he said “but much of the public do not realise that that will have big implications for them as their pensions will be subject to tax and inheritance tax.”
The Leicestershire MP then asked if the Government would “consider a campaign to let people know that that change is coming.”
In response Sir Stephen Timms, Social Security Minister since July 2024, said “I am not quite sure what change the Hon. Gentleman is referring to.”
Dr Luke Evans, Member of Parliament for Hinckley and Bosworth, said “The simple fact that a Pensions Minister isn’t sure of what the changes are shows why the Government needs to do more to let people know about this change and how it would impact them.
“Pensions are notoriously confusing, and we’ve seen, particularly with many of the comments made by WASPI campaigners, that people don’t always understand what impact these changes have on their future finances.
“The Minister said in his response that communication and planning is key, I hope the Government will do more to raise awareness around how much of an impact their death tax will have.”
Mel Stride MP, Shadow Chancellor of the Exchequer and former Secretary of State for Work and Pensions, said “Labour’s own Ministers don’t know what was in their Budget, but Britain’s pensioners certainly do.
“Labour have already snatched away pensioners’ winter fuel payments. Now some are faced with difficult decisions around legacy planning and could end up being taxed twice. Many may not even know this change is coming.
“Under new leadership, the Conservatives will ensure pensioners are treated with the dignity and respect they deserve.”
