Background
The House of Lords Economic Affairs Committee appointed the Finance Bill Sub-Committee on 2 September 2025 to consider the draft Finance Bill 2025–26. The Sub-Committee’s terms of reference are to consider technical issues of tax administration, clarification and simplification, and not the rates or incidence of taxation. The draft Finance Bill was published on 21 July 2025 and the Sub-Committee launched its inquiry on 17 September 2025.
The inquiry
The Sub-Committee’s inquiry examined measures in the Finance Bill to bring unused pension funds and death benefits into the scope of inheritance tax, and to reform agricultural and business property reliefs.
Key recommendations
The report recommends that the Government:
- extend the inheritance tax payment deadline for these measures from 6 to 12 months;
- introduce safe-harbour periods from late interest payments for personal representatives not at fault for missing deadlines;
- take steps to raise awareness of the reforms and produce practical guidance and support for those affected; and
- monitor the long-term impact of the reforms on farms and businesses and consider changes that may need to be made as a result.
Chair’s comments
Lord Liddle, Chair of the Finance Bill Sub-Committee, said:
“Our inquiry focused on how the Government plans to implement these inheritance tax changes. While we were pleased to see the changes the Government made to these measures at Budget 2025, which address some of our concerns, significant work remains to ensure that these measures work in practice for personal representatives, businesses, and farms.
“We are particularly concerned about the impact these changes will have on personal representatives administering an estate at a time of grief. The practical issues created by bringing pensions into inheritance tax risk causing significant delays and costs. Moreover, many of those affected may be entirely unaware of how these changes will impact them.
“Finally, a theme throughout our inquiry was the Government’s lack of proper consultation on these measures. The Government failed to listen to the concerns of stakeholders early on, resulting in late-stage changes and avoidable anxiety and costs for those affected. We want to ensure this doesn't happen again in the future.”