Pensions & IHT: some relief for Executors around the future process

My colleague, Alice Honeywill from our Pensions team, has summarised the November budget statement on the future taxation of unused pensions after April 2027 here.

As she notes, these are only statements at this stage but do indicate some welcome changes from a Personal Representative's perspective.  The main reassurances are:

• pension beneficiaries will now be jointly liable with the PRs for IHT attributable to pensions.
• PRs will be able to direct pension scheme administrators to withhold 50% of the pension for up to 15 months from the date of death and to use those funds to pay pension IHT straight to HMRC.  
• PRs will not be liable for IHT referable to pensions discovered after they have been given formal HMRC IHT clearance.  Such liability will sit solely with those pension beneficiaries. 

The government has promised clear guidance, an Inheritance Tax Checker Tool as well as a straightforward system to pay the pension IHT.  We therefore await further detail in the coming months.

The government’s Policy Paper confirms a welcome change to make a pension beneficiary jointly liable with the PRs for pension IHT.