Pension Inheritance Tax and Access to Work

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1:00through investment fraud, and victims lose more than money. Upset, sad, felt alone, and just scrabbling to find some answers. And some disabled people who receive support through the government's Access to Work scheme are having their funding cut or even removed. But first, you may have forgotten, but in six months' time, a major change begins to the way inheritance tax is calculated. We will close the loophole created by the previous government, made even bigger when the lifetime allowance was abolished, by bringing inherited pensions into inheritance tax from April 2027. Rachel Reeves, of course, with that announcement in her first budget in 2024.

1:45Well, it seemed a long way off then, but that change will apply to any death from the 6th of next April. Any money left in pension pots will be added to the rest of the deceased's estate and be liable for inheritance tax. Pensions can still be left tax-free to a spouse or civil partner, but left to anyone else, tax will be due if the total estate exceeds the threshold where inheritance tax begins, and that can be as low as£325 ,000. Now, this is a big change on the current rules which have been in place since 2015. They allow pension funds to be passed to all heirs free of inheritance tax. But the government says that was being abused by people who built up pension funds not to live on in retirement, but to pass to their heirs tax-free.

2:32We get many emails about this change from our listeners, like Russ, and first David, who changed his plans after that budget announcement. I started using it when I was not going to use it. I was going to live on ISIS because taking it out at 40%, so I'm paying 40 % to take the money out. I'm then giving some to my children as regular payments from excess interest because at least that avoids them being taxed twice. So I've made some changes, but there's not much you can do because the money's locked in. You know, you wouldn't have put it there. It's retrospective. They changed the rules on you after I've been doing things for what must be 15 years, 20 years.

3:14And then they've altered. They've just moved the goalposts. It's a concern because the word unused previous to Rachel Reeves standing up at the budget was understood to be pension policies that weren't being drawn down on and indeed had been lost or the person had died. But now it's being used to target every single private pension in the UK and it's causing confusion. Well, listening to that is Sir Steve Webb, a former Liberal Democrat Pensions Minister and now a partner at Pensions Consultants Lane, Clark Peacock. So, Steve, many listeners have very strong views about these changes. In fact, I've just had an email from somebody or a tweet from somebody supporting that government view, which, of course, is that pensions are there to be used for their intended purpose of funding retirement, not as a vehicle to transfer wealth.

4:10Does that view stand up in your view? You can see why the government made the change, because financial advisors were saying to people, if you've got money in an ISA and you've got money in a pension, run down your ISA first, because that counts for inheritance tax and the pensions until now didn't. So there were people clearly organising their finances to minimise their tax and the government said, well, we give you a tax break to save for retirement. We don't need to give you an extra tax break so you can pass it on free of inheritance tax as well. And of course, some people are trying to change their plans, as David was.

4:42He's taking money out now as an income, buying an annuity, paying tax on that, but then giving it to his children regularly as a regular gift, hoping to avoid inheritance tax. Does that work? It can do. So there are provisions whereby if you've got the income that you need to live your retirement in the normal way and you've got regular surplus on top, you can gift out of that surplus income and subject to certain rules and proper documentation that may not count for inheritance tax. And there are other rules about if you give money away and survive seven years and so on. But my one strong feeling on all of this is that DIY inheritance tax avoidance is never a good idea.

5:22You know, if you're talking about states of sometimes getting on for a million pounds or more, talking to a professional advisor who knows what they're doing, we'll make sure you don't fall foul of the rules and get it wrong. Yes, because as you say, simply taking money out of a pension, that there are consequences to that, not least tax consequences sometimes. Professionals, though, are complaining not so much about the principle, but how it will actually work in practice when someone dies. There are real concerns about that. What problems do you see? I think it's going to be awful, to be honest.

5:53So we have people who perhaps loosely you and I would call executors, so the people sorting out the estate. Often the family, of course, isn't it? Absolutely. And the government call them personal representatives because they might not be executing a will. They're just the person sorting out the estate. They may themselves, as you say, be bereaved and upset and distressed and so on. And they've always had to find out the estate, the value of the house, jewellery, property, whatever. they've now got to find out details of every pension that the deceased was a member of so they've got to find the paperwork contact all of them ask the right questions get the information back and only when they've heard back from the worst administered pension scheme and we all know some appallingly administered pension schemes only when they've heard back from the worst one can they gather the information work out the tax due then tell the pension schemes how much tax to pay, it's going to take ages.

6:46And there's a six month limit after which you're paying interest. So I think people trying to do their best, do their civic duty, if you like, are going to be caught in the middle of it. It's horrible. And you say all pensions, but I was talking to someone just this morning who was confused about whether his pension would be caught by this. He's on a final salary scheme or a salary related scheme. They are not generally caught once you've retired. Are they? It's pension pots that you've saved up yourself that are. It is. You're right. The main focus is these pension part, what they call defined contribution pensions.

7:18But there are cases where, for example, a death in service lump sum in certain cases will count or a payment you get if someone retired and didn't draw their pension for long. So you can't assume that traditional pensions aren't in the net. You have to find out about everything first and then rule some of them out. And that's the problem. People aren't pension experts. So they're going to have to ask every pension scheme to give them the information, both how much money is involved and who's going to get it. because, as you said, passing on to a spouse or civil partner isn't subject to inheritance tax, but to anybody else it is.

7:50So they're going to become almost like amateur private detectives gathering the information so they can fill in the IHT paperwork and only after all that can they then get probate. Yes, and of course paying interest on that owed inheritance tax all the while. Now before you go, Steve, when you're in government, you introduce the triple lock. That means the state pension rises each year by inflation, wages or two and a half percent whichever is highest now this week Andy Burnham the prime minister announced a big change to that can you explain to us briefly how that will work yes so what he said is every year pensions will definitely get inflation so the amount prices have gone up and if that's a very low number they'll always get two and a half percent but there was a third leg sort of lurking which is that they will always keep the pension a certain share of the average wage so say in round numbers it's 30 percent of the average wage now it will never dip below that.

8:43So as years go by, the pension will always be at least that 30%. So if people's wages are growing over time, so will the pension. So it's not quite as draconian as it sounded. It will save the government money. That's partly why they've done it. But it's not like going back to the 80s and 90s when there was just a price link. No, and because it will save money, I mean, billions of pounds a year, we're told eventually, it must mean that the rises in the state pension are less than they would have been under the triple lock. So pensioners in the future will be poorer than they would have been. But that's a difficult concept.

9:17And there's been a lot of misunderstanding. There has. So pensions was to go up every year, at least two and a half percent every year. But over the coming years, by less than they would have done. And that's where these billions of pounds of savings come from. So in cash terms by 2040, so a decade after they start the policy, pensions will be about£1 ,000 a year per pensioner, lower than they would have been. They'll still be higher than they are now, but they won't rise by as much. So Steve Webb, thank you very much for explaining that so clearly. The money saved, of course, by this adjusted triple lock, that's what Labour calls it, is, as we said, intended to help pay for a national care service in England, offering free care in old age.

9:58And on Wednesday, Felicity Hannah is here with Moneybox Live asking, well, how it works now and how it might work under these plans. Tell us your experiences and views. Email moneybox at bbc.co.uk or send us a voice note on WhatsApp. The number is 033 067 83 183.

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10:52Criminals have stolen more than£900 million from tens of thousands of victims through investment fraud in just 12 months. And the biggest group of victims are in their 30s. And it's not just money they lose. Really embarrassed, totally scared, just really hot-blooded, just felt so ashamed that I'd been I never thought that I would be a victim of such crimes and fraud The amount stolen from victims was up by a fifth on the previous year the number of victims also jumped by well over a third Those figures are all from the latest report of the National Fraud Intelligence Bureau published last month and this week the National Crime Agency started a campaign aimed at helping people avoid this crime, which typically robs its victims of tens of thousands of pounds.

11:50Well, Dan Whitworth's here. And Dan, you've been talking to Jake, who we just heard from. But first, those numbers. We do a lot of fraud reports, you and me, on this programme. But these are eye-watering, aren't they? We do, and they are, Paul. And I just want to remind people,£911 million was reported stolen to report fraud from April to March of this year. and that's across England, Wales and Northern Ireland. Now, victims of fraud in Scotland report directly to the police. As you say, that is up 20 % from the year before. That's the amount stolen. The number of victims is over 36 ,000. That is up by nearly 40 % and the report says the average loss was£28 ,000.

12:33And you know what, Paul? With such large numbers, all too easy, you can lose sight of victims in this. Now, we heard from Jake. he had£71 ,000 stolen. Now, he'd earned the money that he wanted to invest after renovating a property, and he got roped in after seeing an ad on social media. But Jake did check up on the firm. He even visited offices run by the company. Just feeling so ashamed that I had made this decision, which turned out to be fraud. I also had borrowed a little bit of my mum's money to put in there for her to give my mum some extra cash each month in her bank. So telling my mum was one of the hardest things.

13:14And then that's when we both pretty much broke down together and were just upset, sad, felt alone and just scrabbling to find some answers. And Dan, what happened to Jake and his mum's money? Well, the criminals had promised a safe investment with high interest repayments. And they're obviously initially made sometimes by thieves to try to con victims into putting in even more money. But those repayments, well, they stopped after a few months and Jake discovered his money had been stolen, all of it. And the same has happened to hundreds of other victims and the firm is now being investigated by the police.

13:51And just to complete the story, Jake actually faced a year-long battle with his bank to be refunded the stolen money under rules. That's how it should happen. And I'm pleased to say he did actually get his money back last month after working with a company called Refundee but not everyone is so lucky. Thanks, Dan. We're live now to talk to Kate Grove from the National Economic Crime Centre. That's part of the National Crime Agency. Kate Grove, you're a senior manager for the unit dealing with what you call high harm fraud. Is that people like Jake? Yeah, absolutely, Paul. And there is a heartbreaking story that we've heard there from Jake and the impact that it has had on him and his family, not just in respect of the financial losses, but the huge emotional and psychological impact.

14:38And the campaign this week has been launched by the National Crime Agency that that's to stop people becoming victims. I mean, is that aimed at people like Jake who say, I thought it could never happen to me? It certainly is. And we're in a position at the moment where well over 40 % of all crime is fraud. So none of us are immune to fraud or becoming a victim, unfortunately. And with this campaign, what we want to do is to protect individuals from becoming victims in the first instance and actually share some advice around that. We think that having that knowledge is really important to help protect people from becoming a victim.

15:20Yes, and it's important that people do protect themselves, isn't it? But, you know, those figures that we said were reported, investment fraud is up by a fifth in money, 40 % more victims. Why are the police failing so badly? Why do we have to sort it out? Well, in terms of what we're doing in law enforcement at the moment, we're working exceptionally hard, but we've got to think of fraud as a whole ecosystem. This isn't just about the police arresting their way out of this. We need to work collaboratively with tech companies and banks and telecommunications providers as well to block the fraudsters before they even reach their victims.

15:58Yes, I'm sorry to say this, you know, But, Kate, people have been telling me this on this programme for years. New organisations, new cooperation, coordination, data collection. And yet every year, it seems, more people are robbed of more money and the thieves prosper. What's going wrong? Yeah, it's frightening statistics that Dan shared there. And what we are seeing as well is we're seeing these huge advancements in the use of technology, technology, particularly artificial intelligence, by fraudsters that's made them appear, certainly these adverts, even more convincing, leading victims to believe that they're engaging with legitimate sources, something that they think is real.

16:42Yes, but my question is, why can't it be stopped? You know what's happening. You've got all this coordination. You've got funding to do it. Why can't you stop it? Why do the numbers go up every single year despite this? Yeah, so, you know, we are certainly doing all we possibly can. And we've taken an approach that is, yes, arresting individuals. And if I make a reference to Operation Hen House just this year, we had well over 500 arrests with that fraud operation. But we are also working to protect individuals. We're needing to keep pace increasingly because fraudsters are becoming more and more sophisticated and we're doing everything we can to keep pace with them.

17:26And Kate, in 20 seconds, one message to people listening who think it couldn't be them, how do they avoid it? Absolutely. So clear, clear message here is no one is immune to fraud. It can happen to anyone. It doesn't discriminate. Your money isn't being invested. It's being stolen. I would encourage you to do your research, understand who you're investing with by checking the FCA firm checker to make sure the company is genuine. Katie Grove from the National Economic Crime Centre, thank you very much. Now, work is seen as a way out of poverty and to reduce the benefits bill. But there is growing complaints that a scheme to help people get and keep work is being quietly cut.

18:07Access to work, the scheme is called, and it pays for specialist equipment and support to help disabled people and others with health conditions find work and stay in it. The finance for an individual is reviewed every three years, and charities, MPs and disabled people are reporting a growing number of cases where existing support is being reduced or taken away, even from people whose needs haven't changed, with no right of appeal. And many people are left asking their employer to bear the cost or give up work completely. Now, the government denies the rules have changed, but earlier this year, the National Audit Office reported that the Department for Work and Pensions was applying its guidance more rigorously and consistently, and it confirmed that some customers had their funding reduced, even though their circumstances hadn't changed.

18:57The Department for Work and Pension said it had concerns that some employers were not meeting their legal responsibilities to provide reasonable adjustments for disabled staff and they were leaving Access to Work to fill the gap and it was trying to close those gaps. Now we've been speaking to two people who've recently had their support package reduced. Here's Rana who works for her local council. My name is Vana and I was born deaf. Since 2023, Access to Work funded a support worker who enabled me to do my job and participate in the workplace on an equal basis with hearing colleagues. In 2025, my funding was cut by more than half and in 2026 it was removed altogether and replaced solely with equipment.

19:45Whilst technology can help, it cannot replace the human support I need to communicate effectively and fully participate at work. This decision is deeply demoralising. Access to work should be helping disabled people remain in the workforce and progress in their careers, not making that harder. And we heard from Jenny, who's a self-employed content creator and public speaker, and she uses a wheelchair. The award that I've been given at Renewal is about 85 % less than I had previously. There's no formal process for reconsideration or for tribunal. called up the day that we got the letter to put in a request for reconsideration, but were told that it was going to be at least five weeks before they even started looking at it.

20:33And I still have to run my business. I still have support workers that I need, even on vastly reduced hours and reduced pay. You know, it's having such a massive toll and impact on my mental and physical health, but also my income and my household income and also my husband having to take time off work to support me in my job, which is not his responsibility because he has his own full-time job. The Department for Work and Pensions told us it's carefully considering Jenny's reconsideration request, but it will take five weeks. Listening to that is Sir Geoffrey Clifton-Brown. He's the Conservative Chair of the Public Accounts Committee in Parliament.

21:11It recently examined the Access to Work scheme. Sir Geoffrey, when you looked at Access to Work earlier in the summer, Did you encounter people like Jenny and Rana who've had their support reduced? Well, hello, Paul. Great to be back on your programme. My sympathies go out, of course, to Rana and Jenny and anybody else in that category, because this is an important benefit, trying to help disabled people of all sorts get into the workplace. So when they don't receive the benefit that they're entitled to, it is distressing. And we did, unfortunately, come across a large volume of written evidence describing multiple failings with the DWP's administration of the schemes.

21:57These included poor communication from DWP, unanswered emails, unreturned calls, unclear letters, inconsistent advice, and customers being passed between different staff without a clear ownership. and as we've come across in these two cases with support being reduced or removed without a clear rationale and that is unacceptable you know people should have their circumstances properly explained to them by the DWP. There is a backlog problem isn't there the government says the number of people supported by this has doubled in five years spending doubled is this about trying to reduce cost or also a suggestion that because of trying to clear the backlog people are DWP staff are doing things too quickly and making mistakes.

22:44Well, there is a backlog. That is absolutely correct. It's gone up from 22 ,000 in 2022 to currently 66 ,000 in March of this year. Since our hearing, the DWP have employed an additional 480 staff to try and help deal with this. but they say that they won't be able to eliminate that backlog. That's without any new applications which are bound to keep coming until September of next year, which we think is too long. And the reasons for that are basically that each caseworker only processes 2.8 cases a day, basically because the system is very complicated, but there are also other problems. for example three IT systems and them having to transfer manually from one system to another.

23:37So they are issuing new guidance to try and help these caseworkers become more productive and understand the system better so that they can process more cases. And the National Audit Office says that the DWP told it that using this new guidance they were being stricter because they were actually following the rules more precisely. I should just butt in for Claire, who's emailed just now to say she's been waiting 30 weeks to get an outcome from her access to work application. So it is still going on. And some organisations working with disabled people have said to us there should be a legal challenge, a judicial review of these wrong decisions.

24:19Is that something your committee would support? Just to go back to Jenny's comment, we did find that it's now taking an average of 37 weeks for these cases to be processed. They're supposed to have a target of doing it in 25 working days, so they're a long way from meeting their targets. Yes, that's Claire who's been waiting 30 weeks. It's pretty normal, sadly for Claire. Sadly, that is the case. And I must really rush you, Sir Geoffrey, in a word, literally, what should the government do now? Well, make the existing scheme work better. Deal with the problems. Deal with the employers who should be providing some of the help under the law, the Equalities Act.

25:05But making sure that when people apply, they can get it done in that time, the 20 days, 25 days. Sir Geoffrey Clifton-Brown, sorry to rush you. Thank you very much. Now it's three weeks till the budget on October the 28th. I can't wait. So let us know what you hope or indeed fear to see. I can't promise John Healy will take any notice, but it will help set our agenda. Just email moneybox at bbc.co.uk or send a voice note or comment on WhatsApp 0306 783 183. We do read and listen to them all and you might get on the show like David and Rusted. In this podcast, the reporter was Dan Whitworth, researchers Joe Krasner and Amber Mahmood, studio manager Isabel Whitehead.

25:49Our editor is Jess Quayle. I'm Paul Lewis and this was a BBC News money and work production for BBC Sounds. Technology is changing our lives at a rapid pace, but how might it be impacting what we value? I'm Ros Atkins and in a new series, I'm exploring how tech is shifting our ideas of worth. in friendship, culture, finance and work. I'll look back at technological revolutions of the past as well as looking forward to a world centred around AI to test whether what really matters to us is changing. From BBC Radio 4, that's The Value Crisis with me, Ros Atkins. Listen now on BBC Sounds.

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