Labour votes to hit war heroes with Rachel Reeves’s nightmare pension death tax

Grieving families of military workers will be hit with from April 2027 for the first time after MPs voted in favour of the raid.

has changed the current tax-free death in service payments, the money given to families of deceased Armed Forces members, and may be subject to a cut of up to 40%.

Children or partners of servicemen and women who are not married will have to pay death duties on the lump sum of money from 2027.

Death in service payments are typically a one-off figure issued to named beneficiaries of a military worker who dies while on duty. The amount stands at the equivalent of four-times the late individual’s salary.

However, due to changes outlined in Rachel Reeves’ Budget last year, military personnel who die while off duty, due to a reason such as an accident or illness, will be hit with the new inheritance tax rules.

This means the lump sum designed to offer family members some form of compensation could be cut by up to a whopping 40%.

Maj Gen Neil Marshall, the chief executive of the Forces Pension Society, has furiously written to HM Revenue and Customs () asking Labour to reverse their decision.

The letter, seen by , read: “Given the high-risk nature of military service and the need for all serving personnel to be focussed on the mission while being treated fairly and equally, irrespective of their marital status, a policy that discriminates against those who are not married or in a civil partnership poses a serious threat to morale, team cohesion and ultimately operational effectiveness.”

A spokesman for the Treasury said: “We value the immense sacrifice made by our brave Armed Forces.

“That is why existing inheritance tax exemptions will continue to apply, meaning that if a member of the Armed Forces dies from a wound inflicted, accident occurring or disease contracted on active service, they will be exempt.

“Any pension funds left to a spouse or civil partner in this scenario will also be exempt.”