In her first budget, chancellor Rachel Reeves announced that Inheritance Tax will be charged on some death benefits, From 6 April 2027, most unused pension funds and death benefit lump sums will be included within the value of a person’s estate for Inheritance Tax purposes. Capita, as administrators of the EAPF will be responsible for reporting and paying any tax due to His Majesty’s Revenue and Customs (HMRC).
Inheritance tax is currently payable if your estate is greater than £325,000 and is left to someone other than a spouse or registered charity. The government estimates that the change will affect around 1.5% of total UK deaths.
A government consultation has been issued regarding the details of the changes which Capita are currently reviewing.
For the sake of clarity, the government is not proposing to include the value of survivor’s pensions or children’s pensions within the value of a person’s estate for Inheritance Tax Purposes.