Draft Finance Bill 2025-26 published

The House of Lords Economic Affairs Finance Bill Sub-Committee published its report, Inheritance tax measures: unused pension funds and agricultural and business property reliefs, on 28 January 2026¹. The draft Finance Bill 2025-26 itself was published on 21 July 2025¹. The Sub-Committee was appointed on 2 September 2025 to consider the draft bill, and launched its inquiry on 17 September 2025¹.

Its terms of reference are to consider technical issues of tax administration, clarification and simplification, and not the rates or incidence of taxation¹. The inquiry examined measures in the bill to bring unused pension funds and death benefits into the scope of inheritance tax, and to reform agricultural and business property reliefs¹.

The report recommends that the Government:

Recommendation
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
Monitor the long-term impact of the reforms on farms and businesses and consider changes that may need to be made as a result

Source:¹

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."

Why it matters for households

The measures under scrutiny affect two groups in particular: people administering estates that include unused pension funds or death benefits, and those with farms or businesses potentially affected by reform of agricultural and business property reliefs¹. The Sub-Committee's recommendations concern the practical handling of inheritance tax payments, including a proposed extension of the payment deadline from 6 to 12 months and safe-harbour periods from late interest payments for personal representatives not at fault for missing deadlines¹. The report also states that many of those affected may be entirely unaware of how the changes will impact them¹. The Sub-Committee's remit covers technical issues of tax administration, clarification and simplification, not the rates or incidence of taxation¹.

What happens next

The report was published on 28 January 2026¹. The Government has not been reported as responding to the recommendations. The draft Finance Bill 2025-26 was published on 21 July 2025¹. Further detail on the tax system is set out in our tax guide.

Sources1 cited