Budget Resolution No. 51: Inheritance tax (pension interests)

What happened: On 2 December 2025, the House of Commons voted on Budget Resolution No. 51, which would bring pension interests within the scope of inheritance tax. The resolution passed by 364 votes to 167, with the government's position securing a comfortable majority.

Why it matters: The resolution approves a Budget measure that closes a long-standing arrangement whereby pension pots could be passed on to beneficiaries without attracting inheritance tax. Under the existing rules, defined contribution pension funds held at the time of death fall outside a person's taxable estate, meaning they can be inherited free of inheritance tax regardless of their value. This resolution signals Parliament's intent to end that position, bringing pension interests into line with other assets for inheritance tax purposes. The change is expected to affect higher-value estates where pension funds have been used as a vehicle for wealth transfer rather than retirement income.

The politics: The vote divided broadly along government and opposition lines. Labour and Labour and Co-operative MPs voted unanimously in favour, joined by the Scottish National Party, Plaid Cymru, the Greens, and three independents. The Conservatives, Liberal Democrats, Reform UK, and the Democratic Unionist Party all voted against, with no Conservative or Liberal Democrat MP supporting the measure. The Liberal Democrats' opposition is notable given that party's general positioning on wealth taxation, and it places them alongside the Conservatives and Reform UK in resistance to this specific change. The vote sits within a wider pattern of parliamentary activity on pension and employer contribution taxation seen in related divisions in early 2026, where government majorities consistently defeated opposition amendments seeking to alter or reverse the approach.