Inheritance Tax and Executors: What the Proposed 2027 Changes Could Mean
Losing a loved one is difficult. Managing their estate can make an already stressful time even more challenging.
Under proposed government changes due to take effect from April 2027, unused pension funds may become subject to inheritance tax (IHT). If these changes go ahead, executors could face additional responsibilities when administering an estate.
Understanding the link between inheritance tax and executors may help families prepare for the future.
New Responsibilities for Executors
If the proposed rules are introduced, executors may need to:
- Identify all pension arrangements held by the deceased.
- Obtain valuations from pension providers.
- Calculate any inheritance tax liability.
- Report information to HMRC.
- Ensure any tax due is paid on time.
These tasks may sound straightforward. However, they could become time-consuming where multiple pension schemes are involved.
Why Could This Be More Difficult?
The proposed changes could create several challenges for executors.
More Administration
Many people hold pensions with more than one provider. Executors may need to contact several companies to obtain accurate information and valuations.
Tight Deadlines
Inheritance tax deadlines do not stop because information is difficult to obtain. Delays in receiving pension valuations could make administration more challenging.
Valuation Issues
Pension values can change over time. As a result, obtaining accurate figures may not always be straightforward.
Increased Risk of Disputes
Where estates are more complex, disagreements can sometimes arise between beneficiaries, executors and other parties involved in the process.
Could Estates Take Longer to Settle?
One possible consequence of the proposed changes is longer estate administration times.
Executors may need to gather additional information before assets can be distributed. This could delay payments to beneficiaries and increase administration costs.
While every estate is different, additional reporting requirements often lead to additional work.
Why Planning Ahead Matters
Good organisation can make a significant difference.
Keeping records up to date and ensuring loved ones know where important financial information is held may help reduce delays in the future.
Although the proposed legislation is not due to take effect until April 2027 and may still change, it highlights the importance of forward planning.
How Fathom Financial Can Help
At Fathom Financial, we help clients organise their financial affairs and consider the potential impact of future inheritance tax changes.
Understanding how inheritance tax and executors may be affected by future legislation can help families prepare and reduce unnecessary complications.
If you would like to discuss your estate planning arrangements or understand how proposed changes could affect your family, please get in touch.
Important Information
This article is for information purposes only and does not constitute financial advice. Any decisions should be based on your individual circumstances and objectives.
Inheritance Tax planning and Trust advice are not regulated by the Financial Conduct Authority (FCA).
The proposed inheritance tax changes referred to in this article are subject to legislation and may change before implementation.
