As you will have seen in the Autumn Budget on Wednesday 30 October 2024, the government is bringing unspent pension pots into the scope of inheritance tax from April 2027. The consultation launched alongside the Budget goes further than that and announces that “from 6 April 2027 most unused pension funds and death benefits will be included within the value of a person’s estate for Inheritance Tax purposes”. The consultation will run for 12 weeks between 30 October 2024 and 22 January 2025.
At present, it would appear that registered group life policies could fall outside of the scope of these changes, as set out in a footnote to Annex B as follows:
“All life policy products purchased with pension funds or alongside them as part of a pension package offered by an employer are not in scope of the changes in this consultation document.”
Dependants’ death in service pensions are unaffected, with income taxed at the beneficiaries’ marginal rate – see Annex B. Excepted group life policies are not mentioned.
GRiD’s Regulatory Committee will be seeking clarity from HMRC on exact scope and intent.
This summary is not intended to replace any aspect of the legislation and should not be relied upon as part of a firm’s compliance with its obligations. GRiD does not provide legal advice. GRiD is mindful of competition legislation and is unable to answer specific questions about the legislation and how a firm should comply with them.
