There is a little known detail in the new inheritance tax rules that experts have said could be a “significant issue” for grieving families.
From April 2027, whatever money held in pension pots will form part of an estate when inheritance tax (IHT) is calculated.
For most people, the total value of their estate would not take them over the £325,000 IHT threshold but for those with large pension pots in combination with other assets, this rule may pull them into paying the tax for the first time.
And earlier this month, HMRC revealed that pension schemes will be able to withhold 50 per cent of a deceased person’s pension pot until the amount of IHT owed is calculated – something known as a withholding notice.
Experts have said a lot of families may not know about this rule prior to a death but will be relying on the money to cover things like funeral costs or other everyday expenses like mortgage payments.
