Pension tax changes will exacerbate probate delays - expert
Changes to pension tax rules will inevitably lead to further probate delays at a time when the system is already overloaded, a Stafford legal expert as warned.
Fiona Mainwaring, Head of Wills and Probate at law firm ORJ, said new inheritance tax (IHT) legislation set to come into force in 2027 will further complicate the administration of estates.
Currently, most defined contribution pensions can be passed on tax-free if the pension holder dies before the age of 75.
From April 2027, however, new legislation will impose income tax on beneficiaries - regardless of the pension holder’s age at death.
“We are already seeing significant delays in obtaining probate,” said Fiona. “This is not just an inconvenience – it can make an already distressing time even more stressful for family members.
“Unfortunately, I envisage the proposed changes around pensions and income tax making an already complex process even more challenging. Many people have multiple pension schemes and legal personal representatives will now have to locate them and gather the information before taking the next steps.
“HMRC will need to be more involved in the process than ever – and that can only lead to further delays.”
Obtaining probate is a vital step in gaining control of a person's estate after death, allowing executors to access accounts, pay debts and distribute inheritance.
The Ministry of Justice says most probate applications are being granted within eight weeks and work is ongoing to reduce waiting times for applicants, including a renewed emphasis on staff training.
But the number of families waiting over a year for a grant of probate more than doubled over the last three years.
The changes could also have financial implications as HMRC proposes charging interest on unpaid IHT after six months - currently set at 8.25% - even if the delays aren't the fault of the executors.
Fiona added: “We are seeing some positive signs that straightforward cases are being processed in a timely manner – but the more complex cases are causing a backlog as they still require paperwork rather than an online submission.
“What’s most frustrating is there appears to be no consistency – two near-identical cases can take completely different lengths of time to be resolved.
“Further investment is needed to make the system fit for purpose but, until then, I would advise executors seek legal advice at the earliest opportunity.”
Fiona said people with wills should aim to have open conversations with their executors so they have as much information as possible and are able to navigate the process ahead.
She also advised keeping a record of all pension schemes and considering making lifetime gifts to family members, taking the money out of the estate and the probate process.
