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Executors to Shoulder Complex Pension Inheritance Tax from April 2027

Industry bodies propose exempting pension pots under £90,000 to reduce executor workload following HMRC’s discovery of £343 million in underpaid tax

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HM Revenue & Customs has estimated that about 10,500 estates in 2027-28 will now have to pay inheritance tax

Overview

  • Unspent private pensions will be included in estate valuations for inheritance tax from April 2027, with personal representatives rather than pension providers tasked with calculating and paying the 40% levy
  • HMRC recorded a record £8.2 billion in inheritance tax receipts in May 2025 and is probing £343 million of suspected underpayments ahead of the pension reforms
  • The Investing and Saving Alliance has called for pension pots under £90,000 to be exempted to ease administrative burdens on bereaved families
  • Executors must trace all pension schemes, collate valuation data and use online tools to settle tax liabilities before probate applications can proceed
  • Anticipating more complex liabilities, 31% of pension holders are cutting contributions and estates are accelerating lifetime gifts to mitigate future tax bills