Institute welcomes changes to Inheritance Tax proposals
The Chartered Institute of Taxation (CIOT) has welcomed the news that the new £1 million agricultural and business property reliefs allowance will be transferable between spouses and civil partners. The Institute had made the case for this change in a number of representations to government.
CIOT has also welcomed changes that respond to some of its concerns around the planned legislation bringing unused pension pots into the scope of inheritance tax.
Transferability of the APR/BPR allowance
On making the APR/BPR allowance transferable, Danny Clifford, chair of CIOT’s Private Client (UK) Committee, said:
“This is a significant and welcome change. The lack of transferability in the draft proposals would have led to some harsh outcomes, especially for those who fail to take expert advice on how to structure their finances. It would have favoured those who can afford professional advice during their lifetimes and disadvantaged those who cannot afford such advice.
“This change marks a simplification of the legislation as it aligns it with the nil rate band and residence nil rate band, both of which are transferable.
“It would have been better had this announcement been made earlier. We have been making the case for this change since October 2024 and many farmers and business owners will have been put to the unnecessary expense of reviewing and amending their wills which could have been avoided had the government acted sooner.
“While we welcome this change, we regret that the government do not appear to be addressing a number of other issues we have raised in relation to this legislation.”
Unused pension pots changes
The government has announced that pension scheme administrators will be able to keep back 50% of the pension fund for up to 15 months in case IHT is payable. Personal representatives will also be discharged from (personal) liability for payment of IHT on pensions that are discovered after the IHT calculations have already been agreed with HMRC.
Danny Clifford commented:
“CIOT previously commented1 that making personal representatives responsible for paying IHT due on the deceased’s pension funds was unfair, since they have no control over the funds. We therefore welcome the government’s recognition of this issue and the adoption of at least some of our compromise suggestions.
“Despite the changes, significant complexities remain. We will continue to examine the details in the coming days and weeks, and work with HMRC and policy officials to support the practical implementation of these proposals.
“More generally, we note that there are a number of further changes to inheritance tax in this year’s Budget on top of those in last year’s. This demonstrates even more clearly that inheritance tax needs a thorough overhaul rather than a stream of piecemeal changes.”
Notes for editors:
- Draft Finance Bill 2025-26 IHT Pensions | Chartered Institute of Taxation