Pensions - Articles - Dashboard programme could help bereaved families on IHT

According to the Pensions Policy Institute* there’s an estimated £31.1bn in unused pension pots, with almost £10,000 in each pot. From 6 April 2027, Inheritance Tax (IHT) will be applied to any unused pension pots of those who have died. RSM UK says a joined-up approach is needed on IHT and the pensions dashboard launch, to enable grieving families meet their IHT and probate responsibilities.

The government expects the executor of the will to ensure the right amount of IHT is paid on any unused pensions pots within six months of a person’s death. As most people hold several pensions over their lifetime, grieving families can find it difficult to identify all of these and ensure the correct IHT is paid within the six-month window.

Andrew Aston, pensions audit director at RSM UK, said: “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.”

Those who miss the six-month window to pay inheritance tax will face interest charges from HMRC on the amount owed. On large pension pots, this can mount up to significant sums.