25 Jul 2025The government will charge Inheritance Tax (IHT) on unused pension pots and death benefits from April 2027. Personal representatives will be liable for reporting and paying any IHT due on unused pension funds and death benefits. The government said that, at present, individuals can accumulate unlimited tax-free savings in their pension, draw on other means to fund their retirement and leave their unused pension assets to be inherited by beneficiaries without any IHT charge. The measure will help reform IHT and 'deliver a fairer, less economically distortive tax treatment of inherited wealth and assets', according to the government. Steve Webb, a former Pensions Minister, commented: 'Life is tough enough when you have just lost a loved one without having extra layers of bureaucracy on top. 'In future, the person dealing with the estate will need to track down all of the pensions held by the deceased which may have any balances in them, contact the schemes, collate all the information and put it into an online calculator and then work out and pay the IHT bill.'