State pensioners given inheritance tax warning after new 2027 deadline issued

Pensioners are being alerted to a looming deadline in 2027 concerning inheritance tax. The Chancellor's Autumn Budget contained some unexpected elements, with many anticipating that workplace pensions would be impacted by National Insurance liabilities - a move that was entirely absent. However, other changes to inheritance tax may compel some to completely reassess their pension pots, as experts outline who will need to act and when.

Felicia Hjertman, CEO of TILLIT, emphasised the absence of changes to National Insurance pension contributions as a "welcome relief" and "reassuring step forward", but cautioned that this doesn't mean savers can relax . She noted that over 80% of households are on track to fall short of a comfortable retirement, adding: "The Government continues to face a significant challenge: creating stronger incentives for both employees and employers to prioritise private pension savings ." David Piltz, CEO of Gallagher Benefits Services, pointed out the additional National Insurance burden on employers - which will result in companies paying more and at lower thresholds - could make workplace pensions more appealing as a way to circumvent the change.



However, while workers might benefit from a larger pension pot as a result of this, it could also be taken away from them through the Inheritance Tax change. After April 2027, unused pension pots will be subject to Inheritance Tax, which was the standard before 2015, reports the Express . HM Revenue and Customs (HMRC) officials are still ironing out the details of changes that might affect pension savings.

David expressed his concerns: "We hope that the final position does not result in a wider impact on this valuable aspect of pension saving with a knock-on erosion of confidence in retirement planning." Legal expert Daniel McAfee, Head of Legal Operations at Lawhive, viewed the potential changes positively as creating a fairer Inheritance Tax system but noted the current exemption could "be seen as disproportionately benefiting wealthier individuals". He warned it might lead to Brits needing to amend their estate planning meticulously.

Additionally, HMRC faces challenges implementing these changes without increasing responsibilities for all involved and "complicate the tax system further"..