Prime Minister Andy Burnham and Chancellor John Healey are facing calls to scrap a planned change to inheritance tax that would bring private pensions into the taxable estate from April 2027. A petition launched on the government's official petitions website asks the administration to reverse the measure, which was confirmed at the 2024 Autumn Budget by then-Chancellor Rachel Reeves.
The proposed change would make pensions liable for the 40 per cent inheritance tax rate. Under current rules, private pensions are normally excluded from an estate for inheritance tax purposes, but the Labour government's budget plan would alter that from April 2027. The petition argues that the change would disproportionately hit single people and unmarried couples, who cannot benefit from the spousal or civil partner exemptions that married couples and civil partners enjoy.
Petition warns of unfair tax burden
The petition states: "We ask the Government to reverse the planned change in April 2027 to include someone's private pension into their estate estimate for inheritance tax." It goes on to say: "In our view this disproportionately penalises single or unmarried couples due to £325,000 individual tax allowance (plus £175,000 if house goes to children)."
The petition argues that inheritance tax was originally intended for the wealthy, but frozen thresholds and fiscal drag have dragged middle and lower earners into its scope. "We believe the inheritance tax was originally a tax for the rich only, those who had mansions, estates and land," the petition reads. "However due to frozen limits, fiscal drag etc., it now brings even low/middle earners into paying inheritance tax, especially if the private pension is included in their estate, as planned for April 2027."
The petition adds: "We think it also disproportionately affects single parents or unmarried couples due to the limit for tax free allowances. A person with just an average house, who saved for retirement could end up with a huge tax bill."
Political context and potential parliamentary impact
The change was originally announced by Rachel Reeves, who has since been replaced as Chancellor by John Healey, following Andy Burnham's succession of Sir Keir Starmer as Prime Minister. The petition is directed at the current administration, urging both Burnham and Healey to reverse the planned change.
Inheritance tax has been a contentious issue for successive Labour governments. Reeves faced significant backlash from farmers over changes to agricultural property relief, and the new pension proposal has now drawn similar criticism. The petition is part of a broader debate about the scope of inheritance tax and its impact on ordinary savers.
Next steps for the petition
The petition will remain open until 25 September 2026. If it reaches 10,000 signatures, the government will issue a formal response. If it reaches 100,000 signatures, it will be considered for debate in Parliament. As of the time of writing, the petition is still gathering signatures, and its outcome will depend on public support in the coming months.
