As pensions dashboards are developed and Inheritance Tax (IHT) is applied to unused pensions from April 2027, RSM UK says there is an opportunity for government to combine these projects to make probate easier and help grieving families.
The government recently confirmed that the executor of the estate will have responsibility for ensuring the right amount of IHT is paid on any unused pensions pots, of which there may be several. Former pensions minister Steve Webb has raised his concerns around the additional pressure this puts on grieving families.
Andrew Aston, pensions audit director at RSM UK, said: “Probate is complex and unwieldy, often creating additional stress for families of the deceased, at an already stressful and upsetting time. As IHT will be paid on unused pension pots from April 2027, this may add to the complexity, unless the government considers building in the ability to see the value of all unused pension pots in the dashboard. This could speed up and simplify the probate process, enabling grieving families to easily calculate any IHT owed in time to meet the deadline to pay inheritance tax within six months of a relative’s death.”
Those who miss the 6-month window to pay inheritance tax will face interest charges from HMRC on the amount owed. On large pension pots, this could mount up to significant sums.
He added: “Unless the government takes a joined-up approach to the pensions dashboards and the introduction of IHT charges on pension pots, meeting the six-month deadline to pay could become even more challenging, creating further headaches for families dealing with the death of a loved one.”
