Calculator next to the words "Inheritance Tax" and a magnifying glass over the letters "IHT"

Association backs Committee recommendations regarding IHT on pensions

28 January, 2026

The Association of Taxation Technicians (ATT) has backed the House of Lords Economic Affairs Committee’s recommendations to improve the workability of the Government’s plans to bring unspent pension wealth into inheritance tax (IHT) from April 2027.

In a report published today,1 the Committee suggested that “significant steps” were needed to ensure the new measures will work in practice. The ATT had submitted its own suggestions to the Committee, and backs key recommendations in the report including:

  • Temporarily extending payment deadlines: While the new processes bed in, personal representatives (PRs) should be granted an extra six months to pay IHT on pension assets. This would give PRs up to 12 months from the date of death before interest charges start to accrue.
  • Wider valuation window: The current four-week window for valuing pension assets should be extended, recognising the challenges pension schemes will face when valuing complex assets such as illiquid funds, commercial property, and unquoted shares.
  • Timely access to pension data: The new Pensions Dashboard, including pensions in drawdown, should be launched before April 2027, with access for PRs, so that PRs can have increased confidence they are including all pension funds belonging to the deceased.
  • More consistent treatment of pension assets: Address disparities in how pension assets sold at a loss are treated, ensuring parity with other taxable assets.

From April 2027, the value of unspent pension assets will be included in the value of the estate when calculating IHT liabilities. This change is expected to affect around 49,000 estates in 2027/28—the first year the measures take effect—increasing the average IHT liability for those estates by an estimated £34,000 each.

The ATT has previously expressed concerns about the significant burdens these new rules will place on PRs, including difficulties in identifying all pension funds belonging to the deceased and obtaining accurate valuations to calculate and pay tax within six months of death.

Helen Thornley, ATT technical officer, said:

“Personal Representatives will carry a heavy administrative burden under the new system, and the Committee’s recommendations reflect a pragmatic and fair-minded approach to making these reforms workable in practice.

“We particularly welcome moves to improve access for personal representatives to pension information and ensure consistent treatment of assets across the tax system.”

Notes:

 

  1. Economic Affairs Finance Bill Sub-Committee: Inheritance tax measures: unused pension funds and agricultural and business property reliefs.