HMRC’s new technical note for IHT on pensions highlights a considerably more complex and administratively demanding landscape for families dealing with estates that include pension assets.
The warning has come from legal and financial services provider Irwin Mitchell.
It said the update published on Monday raises practical concerns about how estates will be administered in real life - particularly for families and executors managing incomplete information at a time of bereavement.
Irwin Mitchell said a central issue is HMRC’s expectation that personal representatives take “reasonable steps” to identify the deceased’s pension savings.
The firm said that will be difficult without any help yet from the Pensions Dashboard, which is designed to reconnect individuals with lost pension pots. It warned that in practice, families often face fragmented records, historic workplace schemes and multiple providers.
With no definitive guidance yet of what constitutes reasonable steps, executors risk uncertainty, delay and increased personal exposure when administering estates.
Penny Cogher, pensions partner at Irwin Mitchell, said: “HMRC’s technical note is an important step forward for the new IHT pensions regime, but it does demonstrate how technically demanding pension‑related inheritance tax will be in practice.
“Pension scheme administrators will be looking for scheme members to take more upfront responsibility with their pension savings in this regard."
She said administrators will expect all ages of scheme members to have clear, up-to-date, expression of wishes forms lodged online with the pension providers so, on being notified of a death, the pension providers can rapidly assess the position and make a decision as to who should receive the pension benefits.
Ms Cogher said: “If the pension benefits are to be paid to the spouse, then importantly, even under the new regime, no IHT is payable on those pension benefits, due to the usual spouse exemption from IHT.”
HMRC has indicated that this week’s technical note forms part of a wider programme of work, with further regulations and public‑facing guidance expected ahead of implementation from April 2027.
HMRC said that final guidance for the new tax regime will be published next spring.
But that’s just a few weeks before the new system comes in, pointed out Tim Camfield, principal at LCP. He warned: “It could leave schemes struggling to update member communications and information ahead of the go-live date.”