RSM UK has called for a joined-up approach between the pensions dashboards and Inheritance Tax (IHT), to allow grieving families to meet their IHT and probate responsibilities.
The call comes ahead of Pensions Awareness Week (14-18 September), with unused pension pots set to fall within the scope of IHT from 6 April 2027.
According to the Pensions Policy Institute, there is an estimated £31.1bn held in unused pension pots, with an average of almost £10,000 per pot.
The planned changes mean that the executor of a will will be responsible for making sure the correct amount of IHT is paid on unused pension pots within six months of the individual’s death.
RSM UK warned that identifying all of a deceased person’s pension pots could be challenging, especially as multiple pensions are likely.
It said more integration between the pensions dashboards programme and the IHT process could help families identify pensions and calculate the tax due within the six-month deadline.
Those who don’t pay IHT within six months could face interest charges from HM Revenue & Customs on the outstanding amount, which RSM UK said could become significant where large pension pots are involved.
RSM UK pensions audit director Andrew Aston says: “Now is the ideal time for the government to apply some joined up thinking ahead of the pensions dashboard launch. Probate is already a complex and unwieldy process, which can create additional stress for families at an upsetting time. As IHT could be due on unused pension pots from April 2027, this adds yet more complexity. We’d like to see the government build in the ability for executors of wills to see all unused pension pots via the dashboard. This could simplify the probate process, enabling grieving families to meet the deadline to pay inheritance tax within six months of a relative’s death.”
