The Society of Pension Professionals (SPP) has called on HM Revenue & Customs (HMRC) to rework core elements of its proposed inheritance tax (IHT) rules for pension benefits, which will come into effect from April 2027.
In its response to HMRC’s technical consultation, the SPP said the draft framework would place unreasonable and impractical responsibilities on pension schemes and insurers.
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The body argues that schemes should not be tasked with deciding whether beneficiaries qualify for IHT exemptions, especially where complex residency rules apply.
It says this role should rest with personal representatives (PRs), who already handle the overall estate.
The SPP also questions proposed reporting duties including requirements to submit information on benefits that would not be subject to IHT, and highlights areas where disclosures appear overlapping or inconsistent.
The organisation further warns that several of the suggested deadlines are too tight, given the time needed to verify identities, collect information and obtain valuations after a death.
It also flags technical and operational uncertainties around data protection, intestacy cases, joint PRs, overseas estates, payment notices, the treatment of a Prospective PR where withholding notices are revoked, and withholding notices.
SPP legislation committee chair Shayala McRae said: “Although HMRC has made good progress in engaging with industry, further refinements are needed to ensure the system is workable, proportionate and does not create unnecessary delays for bereaved families.
“The pensions industry is committed to helping make government reforms work, but the current proposals place significant responsibilities on schemes that are simply not practical in many cases.
“Determining inheritance tax exemptions often requires information that pension schemes simply do not have and cannot reasonably obtain.
“The SPP’s response therefore highlights a number of ways in which a framework that is both operationally realistic and effective can be delivered.”
