The House of Lords Finance Bill Sub-Committee has called for evidence on government proposals to impose inheritance tax on pensions on death.
The committee is probing how this will work in practice, and whether the government has sufficiently taken into account eh impact of the reforms on savers and pension schemes.
HMRC published the draft Finance Bill legislation in July, confirming it plans to go ahead with the proposal to impose IHT on pensions from April 2027. Earlier this year the chief executives of AJ Bell, Hargreaves Lansdown, Interactive Investor and Quilter signed a joint letter to Chancellor Rachel Reeves, opposing the plans.
Now the Lords Finance Bill sub-committee is inviting contributions to its inquiry on the idea. The sub-committee will consider the administration and implementation of these measures, rather than the rates or incidence of tax.
This inquiry seeks written answers to these questions:
Identifying inheritance tax due
- How challenging will it be for personal representatives to identify and report inheritance tax due on unused pension funds and death benefits?
- What is your view of the Government’s proposals to ensure personal representatives can obtain the information they need from pension providers? How practicable is it?
Liquidity challenges
- How significant will liquidity challenges be for personal representatives paying inheritance tax due on unused pension funds and death benefits?
- How straightforward will it be for personal representatives to recover amounts in respect of inheritance tax from pension beneficiaries?
- What are your views on the Government’s suggestions as to how personal representatives can manage any liquidity challenges? How else could the Government support personal representatives who face liquidity challenges?
Impact
- Has the Government sufficiently taken into account the impact of the measure on personal representatives and pension schemes administrators?
Implementation and transition
- How aware of the proposals are those who may be affected by the proposed change? What more should the Government do to raise awareness ahead of April 2027?
- What are your views on the proposed timetable for the introduction of this measure? Do you think there should be any transitional provisions?
Identifying and funding inheritance tax due
- How easy will it be for those affected to report and make arrangements for funding the inheritance tax due, within the statutory six-month period?
- What issues, if any, might arise in relation to obtaining (and agreeing) valuations of qualifying business and agricultural property for inheritance tax purposes?
Consultation
- What are your views on the consultation process the Government has followed in relation to each of these measures?
