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Grief Tax: Bereaved Face Impossible Pension Deadline
28 Jan
Summary
- Bereaved families face a strict six-month deadline for inheritance tax.
- New plans may draw pensions into inheritance tax net from spring 2027.
- Lords call for a one-year deadline extension for pension assets.
A House of Lords report has highlighted a significant concern for bereaved families, who may face an "impossible" six-month deadline to pay inheritance tax on pensions. This new requirement, slated to be implemented from spring 2027, could see pension pots included within the inheritance tax net.
The report criticizes the government's plans for imposing a "huge" burden on grieving relatives. Personal representatives will need to contact pension providers, obtain valuations, and report these sums to HMRC within six months of a loved one's death, a period many find incompatible with existing pension processes.
To alleviate this pressure, the Lords are urging the government to extend the inheritance tax deadline to one year specifically for pension assets. They also advocate for a 'safe harbour' provision, protecting representatives from late payment interest if they demonstrate reasonable efforts to meet deadlines outside their control.
