Lords back Institute call for early guidance on IHT pension changes
The Chartered Institute of Taxation (CIOT) has welcomed today’s House of Lords report on the government’s proposed inheritance tax (IHT) changes, which endorses changes the Institute has been calling for, including the need for guidance and regulations for the IHT pension changes to be published much sooner than the government’s plan of spring 2027.
The recommendation is among those featuring in today’s report from the House of Lords Finance Bill Sub-Committee: ‘Inheritance tax measures: unused pension funds and agricultural and business property reliefs’.
Ellen Milner, CIOT Director of Public Policy, said:
“Today’s report echoes our concerns about the complexity the new measures bring to the tax system. We are pleased that the Lords have listened to our call for clear guidance and regulations to be available well before spring 2027. We also welcome the Lords’ call for additional HMRC support for taxpayers affected.”
Transitional arrangements for older farmers and business people
In the report the committee expresses concern that the APR/BPR anti-forestalling measure “goes too far” and says the government “should seek views on how to ensure that older individuals are not unfairly impacted by the changes”.
CIOT Vice President John Barnett commented:
“The Lords heard from witness after witness – including CIOT – that the changes are causing distress to older farmers and business owners and about the need for some kind of transitional arrangement to mitigate this.
“I hope the government will heed these calls. It is not too late for them to act. I encourage them to consider our proposal of amending the legislation so that any gifts made between 30 October 2024 and 5 April 2026 of relievable assets would continue to benefit from the old rules even if the person died within seven years.”
Added complexity for personal representatives
Referring to oral evidence provided by CIOT’s Emma Chamberlain and John Bunker, the report notes the difficulties anticipated in obtaining timely, accurate valuations for businesses that would previously have qualified for 100% agricultural / business property relief, and possible delays for beneficiaries due to the risk of unknown pensions.
It also highlights the issue of paying IHT on an asset value that reduces following the owner’s death, either due to the impact of the death on the business or the need for quick sales to fund the IHT.
Ellen Milner said: “The report’s recommendation for the government to consider a loss-in-sale relief for pension assets (equivalent to that already in place for the rest of the estate) also picks up something the CIOT have called for previously. We believe this would be a reasonable change to make IHT fairer.”
Extended payment deadline needed
The report goes on to recommend extending the IHT payment deadline from 6 months to 12 months where there are assets qualifying for APR/BPR and, at least initially, for estates with pension interests while the new rules bed in.
On further supporting personal representatives, pension scheme administrators and beneficiaries, the report notes stakeholders “must be given an appropriate and reasonable period of time to review and comment on draft information-sharing regulations and related guidance.”
Ellen Milner said: “These changes add to the complexity of valuing and administering estates for inheritance tax. The Lords are right to call for personal representatives to have longer to pay IHT due. We would favour allowing 12 months across the board given the challenges involved.”
Notes
- The Lords report can be read at Lords Committee publishes report on Finance Bill 2025-26 - Committees - UK Parliament