House of Lords publishes report on Finance Bill
February 9, 2026On 28 January, the House of Lords published their report on proposals laid out in the Finance Bill 2025-26, raising concerns about what the proposed reforms will mean in practice.
The Finance Bill sets out proposals for reforms to inheritance tax, unused pension funds and death benefits, which were first announced at the Autumn Budget on 30 October 2024 but have since been revised on several occasions.
The new report, published by the House of Lord’s Finance Bill Subcommittee, raises concerns about what these reforms will mean for PRs who will be made responsible for IHT on pensions and urges the Government to take significant steps to ensure these measures can work in practice.
The report scrutinises two major inheritance tax (IHT) reforms due to take effect from April 2027:
1. Unused pension funds and certain pension death benefits will be brought into scope of IHT.
2. Agricultural and business property reliefs (APR/BPR) will be restricted, increasing IHT exposure for some estates.
Whilst the report does not focus specifically on charities, it does highlight several areas of concern which will impact charities and Legacy Administrators.
While charities remain IHT-exempt beneficiaries, the Committee repeatedly warns that the administrative burden, delays, and liquidity pressures on estates will increase significantly.
This has direct consequences for the timing, certainty, and cost of charitable legacies, even where charities ultimately pay no tax.
Matthew Lagden, ILM CEO said:
“We welcome the inquiry from the House of Lord’s Finance Bill Subcommittee and are pleased that concerns which have been raised are being considered as the Bill passes through Parliament.
“This report highlights our concerns that the IHT reforms proposed in the Finance Bill will have clear consequences for legacy income such as more complex estate administration and delays to charitable income.
“Based off the findings of the report, the key message for our members is this: Charities will still receive legacies—but they might receive them later, after more complex estate administration, and sometimes from smaller residual estates. Legacy teams should plan on the basis that administration will be harder, not easier, from April 2027 until the initial issues in dealing with this are resolved. We are working with our partners to do everything we can to mitigate these issues, and will continue to update you as the situation develops.”
You can read the full House of Lords Finance Bill Subcommittee report here.
The Law Society has issued a response to the report, which you can read here.
Resources
The ILM has produced some useful documents to help “unpack” the report. Click below to view and download.
House of Lords Finance Bill Subcommittee Report – Executive summary for charity legacy managers House of Lords Finance Bill Subcommittee Report – Stakeholder Briefing