Draft legislation: Reforming Inheritance Tax - unused pension funds and death benefits

The ATT has provided comments on the draft legislation and policy paper "Reforming Inheritance Tax — unused pension funds and death benefits" published on 21 July 2025.

In the ATT's response, we highlighted our concerns about the implications of the change in policy for personal representatives (PRs). The latest policy has shifted the liability for paying any Inheritance tax (IHT) on pension assets from the Pension Scheme Administrators (PSAs) to the PRs. This has been done to minimise the number of pension beneficiaries inadvertently affected by the policy even if no IHT is due. 

We consider that too little consideration has been given to the increased risk placed on PRs as a result of shifting liability to them. The current provisions for PRs to recover IHT on pension assets from pension beneficiaries are inadequate. The ATT considers that more needs to be done to ensure that individuals and professionals can still confidently accept the role of PR, and that the policy does not result in unintended consequences including making it more challenging for individuals to find PRs willing to handle their estate and increasing the costs of estate administration.