Chancellor Rachel Reeves is facing calls to scrap the "most hated" looming tax raid on pensions as critics claim the levy will be "unbelievably unfair" on thousands of households.
Last year, the Chancellor confirmed retirement pots would become liable for inheritance tax (IHT) from 2027 as part of the fiscal policies unveiled during her Autumn Budget statement.
IHT is levy on the estates of individuals who have passed away if their assets are valued above £325,000 threshold, with taxpayers being slapped with a 40 per cent charge from HM Revenue and Customs (HMRC).
Nearly half of British voters reject Labour's planned changes to pension inheritance rules, marking these reforms as the government's least popular revenue-raising measure.
**ARE YOU READING THIS ON OUR APP? DOWNLOAD NOW FOR THE BEST GB NEWS EXPERIENCE**
The Chancellor has confirmed changes to inheritance tax rules impacting pensions
| GETTYResearch from investment platform AJ Bell reveals that 44 per cent of those surveyed oppose the proposals to bring pension funds under inheritance tax regulations, whilst merely 21 per cent express support.
The pension inheritance tax modifications have attracted greater resistance than other controversial fiscal policies introduced during Labour's first year.
Even the Government's decision to increase employer National Insurance contributions garnered less opposition at 41 per cent, with capital gains tax rises and agricultural inheritance tax restrictions also proving less contentious amongst respondents.
The reforms, scheduled to commence on April 6, 2027, will fundamentally alter how pension assets are treated for inheritance purposes.
Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.
Currently, defined-contribution pensions remain outside an individual's estate, allowing tax-free transfers particularly when death occurs before reaching 75 years of age.
Under the new regulations, unspent pension funds and death benefits will count towards estate valuations in most circumstances.
These assets could face taxation rates reaching 40 per cent, contingent upon estate size and applicable allowances.
The existing exemption permitting tax-free pension transfers to children and other beneficiaries will be eliminated, with protection remaining solely for transfers between spouses or civil partners.
Rachel Reeves is facing mounting scrutiny over how her fiscal plans
| GBNEWSIndustry professionals have condemned the scope of these changes, particularly regarding pension funds that remain inaccessible to their owners.
Caitlin Southall, the director of SSAS Transformation and Proposition at WBR Group, branded the inclusion of "unused" pension funds within inheritance tax boundaries as "unbelievably unfair".
LATEST DEVELOPMENTS:
Britons are being warned about looming tax changes
| GETTY"If people cannot 'use' these funds under current rules, why should they be subject to IHT?" Southall questioned.
She warned that the Government is establishing major obstacles for individuals attempting to save prudently for retirement, arguing that whilst discouraging pensions as wealth transfer vehicles might be legitimate, "this is not the way to do it".
Tom Selby, AJ Bell's Director of Public Policy, emphasised the politically sensitive nature of all revenue-raising measures, noting that no tax change announced by Rachel Reeves has secured majority voter backing.
"IHT is often described as the most hated tax and this data backs that up," Selby stated, confirming that the pension inheritance proposals face the broadest opposition amongst all fiscal measures introduced thus far."