Autumn Budget implications for charitable legacies

Technical amendments to the planned extension of Inheritance Tax to pensions

This year’s Budget announcement revealed no major surprises for Inheritance Tax or charitable legacies. The much-valued charitable tax incentives for legacy giving remain in place and plans are progressing to bring unused pension assets into the scope of Inheritance Tax (IHT) from April 2027.

However, the accompanying policy paper did introduce two technical amendments, including the option for estate administrators of using a separate component for the purposes of calculating the reduced 36% IHT rate on charitable estates.

While limited details are available at this stage and clarity is needed, we are hopeful that this new component could alleviate the potential disparity between pension and non pension assets, helping to preserve people’s charitable intentions and providing the flexibility to ensure that qualifying estates can continue to access the 36% rate within the new pension IHT framework.

The other amendment allows a prospective personal representative to direct pension scheme administrators to pay the tax due to HMRC directly when certain conditions are met.

Further details are expected from HMRC shortly, with legislation to be included in Finance Bill 2026-27. We will share future updates.

For more on the technical amendments, see section 1.27 of the HMRC Policy Paper - Overview of tax legislation and rates. 

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