After much anticipation (and a considerable number of false rumours), the Chancellor of the Exchequer presented her second Budget on 26 November 2025.
However, the only pension-related changes that would affect contributing EAPF members are shown below.
Extending the freeze on income tax thresholds from April 2028 to April 2031 – this means that, as people’s wages increase, more people are likely to be pushed into higher tax brackets, meaning that some people who:
- Previously didn’t pay any income tax, will now have to pay 20% tax on some of their earnings (but only those earnings that exceed the 20% income tax threshold)
- Previously only paid 20% tax on some of their earnings, will now need to pay 40% tax on some of their earnings (but only those earnings that exceed the 40% income tax threshold)
Where a Death Grant Lump Sum is subject to Inheritance Tax* (applicable from April 2027) - a person’s Legal Personal Representatives (LPR) will be able to instruct the EAPF or Capita to withhold 50% of any taxable death grant lump sum due for up to 15 months and pay the Inheritance Tax due in certain circumstances. Additionally, the LPR will be discharged from a liability for payment of Inheritance Tax on pensions discovered after they’ve received clearance from HMRC.
*The conditions under which such a payment is subject to Inheritance Tax are still to be confirmed.