The House of Lords Finance Bill Sub-Committee has begun a consideration of government proposals to impose inheritance tax on pensions on death.

The Committee has launched a call for evidence on how the reforms will work in practice, and whether the government has sufficiently taken into account eh impact of the reforms on savers and pension schemes.

HMRC published the draft Finance Bill legislation in July, confirming it plans to go ahead with the proposal to impose IHT on pensions from April 2027.

In January the CEOs of AJ Bell, Hargreaves Lansdown, Interactive Investor and Quilter signed a joint letter to the chancellor’s office opposing the plans.

According to research from AJ Bell, just 21% of Britons support the policy, while 44% are against the government’s plans.

Rachel Vahey, head on public policy at platform AJ Bell, called on the House of Lords to ask the government to change its plans.

She said: “Hopefully the Lords will be able to see what effect this will have and ask the government to change direction. Bereaved families will face a huge administrative burden, with the government insisting they settle the IHT bill within six months. Many people have complex financial affairs, especially those who die unexpectedly, meaning settling the bill quickly may not be straightforward. 

“But it’s not too late. Ministers still have time to see that these proposals are not the best way to achieve their objectives. There are alternative solutions to taxing pensions on death that won’t cause the administrative frustration, delays in payment and concerns for bereaved families that the current set of proposals threaten to, while still raising the same amount for government coffers.”

Current plans from HMRC have the administrators/executors of the estate handling the reporting and payment of IHT on unused pension funds on death.