Baroness Ros Altmann
Pension Expert and was UK Minister of State for Pensions 2015-16
The Government urges everyone to prepare for later life. But for those who do so, the money left when they pass away can be a lucrative target for politicians to raid.
The administration of someone’s Estate has turned into a real money-spinner for the Treasury.
One example is the shock imposition of 40% inheritance tax (plus further income tax) on inherited pensions – which brings more Estates into the Inheritance Tax quagmire. The massive 75% rise in the cost of a Probate grant — from £300 to £526 — which one in two bereaved families will have to pay, since Probate is required for anyone who owned their own home or has more than a few thousand pounds of savings, is another.
Consequences faced by bereaved relatives
Families trying to deal with a loved one’s Estate, have told me the whole system feels rather like a scam. The cards are stacked against people who genuinely want to pay the tax on time.
Government rules require payment of 40% of the value of the assets left in an Estate within six months of death – which can be hundreds of thousands of pounds. But until Probate is granted, most of the assets cannot be sold to raise money for the tax payment due.
Even more unfairly, the Treasury charges around 8% interest on late payments.
Difficulties posed by Probate
Without Probate, the Estate is frozen – property such as the family home cannot be sold, and bank accounts or investments may not be released. So, the Government imposes high interest on money you cannot pay because the Government’s rules don’t let you.
Probate often takes months, leaving families hanging on the phone for ages to ask a question, at an already stressful and difficult time.
The cards are stacked against people who genuinely want to pay the tax on time
Until you’ve struggled with the mind-boggling complexities of administering a loved one’s estate, you probably won’t realise just how unfair and punishing it can be.
Adding pensions to this complex web of requirements next year will just make the unfairness and complexity worse.
The unfair Inheritance Tax and Probate rules, which impose unavoidable costs on grieving families at a time when they’re least able to cope, must be reformed.
Probate fee rise
https://www.gov.uk/government/news/court-and-tribunal-fees-updates-from-july-2026
IHT on pensions
https://www.gov.uk/government/consultations/inheritance-tax-on-pensions-liability-reporting-and-payment/outcome/inheritance-tax-on-pensions-liability-reporting-and-payment-summary-of-responses
Interest charged on late payment of IHT – any money not paid within 6 months of death is charged at base rate +4%!
https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates
