Irwin Mitchell Calls for Early Guidance on Proposed IHT Pension and Relief Changes

Irwin Mitchell welcomes yesterday’ s House of Lords report scrutinising the government’s proposed inheritance tax (IHT) changes, highlighting several areas where change is still needed to make it workable and earlier clarity is urgently needed for private clients, including those with pension interests, family businesses and agricultural assets.

The House of Lords Finance Bill Sub Committee report, “Inheritance tax measures: unused pension funds and agricultural and business property reliefs”, echoes many of the concerns we have raised through professional bodies regarding the complexity and uncertainty introduced by the new rules.

John Bunker a consultant solicitor and Chartered Tax Adviser in Irwin Mitchell’s Private Client Advisory team, who gave evidence to this House of Lords Committee for the Chartered Institute Of Taxation, said: 

“We’re pleased the House of Lords report recommended some important changes to the legislation and practice for IHT on Pensions to which we have contributed. Both private clients—particularly business owners, farmers, and individuals with significant pension arrangements—and practitioners need clear and timely guidance so they can plan confidently with these major changes. 

“Waiting until spring 2027 for final guidance on the pension related IHT changes will not allow practitioners or pensions administrators the time needed to finalise changes to practice. We agree this guidance must be complete by Dec 2026. need stability.”
 

The report highlights the difficulties executors are likely to face, including obtaining timely valuations for assets that formerly qualified for APR/BPR and delays caused by unreported or unknown pension benefits.

“These rules materially increase the administrative burdens on personal representatives. Issues such as fluctuating asset values, liquidity challenges and pension discovery risks already complicate estate administration—these reforms will add further pressure. HMRC do need, as the Lords say, to invest in sufficient resources to deal with these many new valuations in a timely manner to enable estates to be administered within time limits.”

Irwin Mitchell also backs the suggestion that the government consider extending existing loss on sale reliefs to pension assets, as for property and shares outside pensions, where their value drops after death.

The report reinforces the need for HMRC and the government to give advisers, pension administrators and personal representatives adequate time to review and comment on draft regulations.

“We strongly encourage the government to prioritise early engagement. Clear, usable guidance is vital to ensure families, trustees and advisers can navigate the new rules without unnecessary risk.”

The High Court has also recently ordered an urgent two-day Judicial Review hearing into the government’s proposed changes to inheritance tax reliefs for farmers and family businesses, which is likely to be heard in February or March 2026.