PARLIAMENTARY WRITTEN QUESTION
(10 October 2025)

To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of introducing a flat 20% tax on defined contribution pension funds collected by pension providers at the point of death.

Asked by:
Abtisam Mohamed (Labour)

Most unused pension funds and death benefits will be included within the value of a person’s estate for inheritance tax purposes from 6 April 2027. This removes distortions resulting from changes that have been made to pensions tax policy over the last decade, which have led to pensions being openly used and marketed as a tax planning vehicle to transfer wealth, rather than as a way to fund retirement. These reforms also remove inconsistencies in the inheritance tax treatment of different types of pensions.

Answered by:
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