Grieving families could be forced to take out loans to pay Labour's pension inheritance tax bills, lawyers warn

Probate lawyers and estate practitioners are sounding the alarm over Labour's proposal to bring unused pensions within the scope of inheritance tax from April 2027, cautioning that the change will leave grieving families in debt. The core difficulty is a timing mismatch: inheritance tax becomes payable before probate is granted, yet probate is the mechanism that unlocks the assets required to settle the bill. Pension proceeds can take as long as two years to reach those entitled to them, while HMRC starts applying 7.75% interest after only six months.

The Council for Licensed Conveyancers warns families may be forced into costly short-term loans to meet tax deadlines they cannot yet fund.

The Society of Trust and Estate Practitioners has written to Treasury financial secretary James Murray demanding legislative fixes before April 2027.