Inheritance tax changes on pensions are what should be grabbing headlines, according to a pensions expert. Former Pensions Minister Steve Webb says the Labour Party government is set for a multi-billion pound windfall.

Webb is a partner at pension consultants LCP, and was UK pensions minister from 2010 to 2015. He warned: “While the inheritance tax changes for farmers have grabbed most of the media attention, it is the IHT changes relating to pensions which will affect far more people and raise far more money.

“Indeed, I think that the government has substantially under-estimated the revenue they are likely to generate through this policy.

“Under the Budget plans, from 2027-28 onwards, the value of ‘unspent’ defined contribution pension pots will be included in the assessment of estates for IHT purposes, as well as certain other pension-related lump sums.”

In response, one wrote: “Absolutely agree Steve. I also think the impact of auto-enrollment over time will be huge as these pots start to grow to a significant size. The goverment has completely underestimated the long term impacts of this change.

“To me, all they had to do was remove the tax free exemption on death under age 75 to ensure that tax revenues would flow from Pensions, just it would be income tax rather than IHT.

“The double taxation now proposed is completely unfair and will drive people to make poor choices. What is bizarre, if it drives more people back towards annuities, tax revenues will drop!

“Overall a spiteful policy with no strategic view on the long term impacts.” Webb said: “There is no doubt that farmers with tractors in Parliament Square are an eye-catching way of drawing attention to one IHT change in the Autumn 2024 Budget.

“But it will be another IHT change in the same Budget which will ultimately raise far more money for the government.”

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