New HMRC inheritance rules as major pension change confirmed | Personal Finance | Finance
Major pension changes confirmed by HMRC could see families facing bigger inheritance tax bills and an increase in paperwork. New guidance reveals that from April 6, 2027, most unused private pension pots and pension death benefits will be included in the value of a person’s estate.
The change will affect more savers who may have previously seen pensions as a tax-efficient way of passing wealth to loved ones. Financial experts are warning families not to be caught off guard by the changes, with some estates set to be pushed above inheritance tax thresholds.
As reported by the Telegraph and Argus, Tim Grimsditch, managing director at Unbiased, said: “The latest HMRC guidelines which come into force on April 6, 2027, show that most unused pension funds and pension death benefits will be included in the value of a person’s estate for inheritance tax purposes.
“This means a significant number of families will find their loved ones’ estates pushed over the tax threshold, facing bills they wouldn’t have under the old rules.”
But what do the new rules involve?
Extra red tape
Mr Grimsditch says the rules will be “unwelcome news for many”, and under the new system, personal representatives and executors will be responsible for gathering information from pension providers before HMRC can calculate any inheritance tax liability.
Probate may take longer
Families face a new multi-step process rather than a direct handover, meaning representatives must contact every pension provider the deceased had to request official valuations. This data must then be reported to HMRC before a bill can be calculated.
What should pensioners do?
- Review estate planning arrangements
- Check pension beneficiary nominations are up to date
- Keep records of all pension schemes
- Consider broader pension withdrawal strategy
- Seek professional financial advice
Mr Grimsditch said: “If you want to protect your family from an unexpected tax bill or an administrative burden, you should consider seeking advice from a professional financial adviser well ahead of April to get your head around the changes, protect your assets, and give yourself peace of mind.”
