# UK pension and tax reform developments

> Live situation record from CLSTR: https://clstr.news/situations/uk-pension-and-tax-reform-developments
> Updated: 2026-10-26T12:52:32.000Z. Sources: 2. Developments: 2.

The UK government announced plans to reform pension access for terminally ill individuals. The proposal seeks to simplify the process by replacing the requirement for medical evidence of life expectancy under one year with a more flexible test stating that death can “reasonably be expected within 12 months.” Pensions Minister Torsten Bell stated the changes aim to “remove red tape” and align pension rules with the wider benefits system.

Following these developments, the estate planning body STEP has urged the government to amend proposed inheritance tax (IHT) reforms. The organization expressed concern regarding plans to include unused pension funds and death benefits within the IHT scope starting in April 2027. STEP warned that these changes could create a “catch-22” for bereaved families and noted that practitioners are already observing shifts in financial behavior, such as earlier pension withdrawals and increased lifetime gifting.

## Timeline

### 2026-10-26: STEP urges UK government to reform inheritance tax on pensions

Estate planning body STEP is urging the UK government to reform inheritance tax plans for pensions, citing survey data that shows clients are already withdrawing funds early to avoid upcoming 2027 tax changes.

2 sources. https://clstr.news/cluster/step-urges-uk-government-to-reform-inheritance-tax-on-pensions

### 2026-10-15: UK Government announces pension reforms for terminally ill

The UK Government plans to ease access to private pensions for terminally ill individuals by adopting a more flexible definition of terminal illness for tax purposes.

2 sources. https://clstr.news/cluster/uk-government-announces-pension-reforms-for-terminally-ill

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Cite as: UK pension and tax reform developments. CLSTR, https://clstr.news/situations/uk-pension-and-tax-reform-developments