Thousands of pension savers may face pressure to sell illiquid assets, as upcoming inheritance tax (IHT) changes could increase financial strain on families inheriting pensions that include commercial property.
Featured in The Times, Bowmore Financial Planning highlighted concerns around changes due to take effect in April 2027, which will bring most pensions, including SIPPs, into scope for inheritance tax. This could alter the outcomes for beneficiaries inheriting illiquid pension assets.
According to data from the Financial Conduct Authority (FCA), obtained by Bowmore, more than 54,000 SIPPs currently hold commercial property. Of those, nearly 1,400 include overseas property and over 8,000 involve multiple owners, factors that can complicate and delay sales.
“Property can be very slow to sell, but in the past that has been less of a problem as there was no inheritance tax bill to pay on property held in a pension,” Bowmore told The Times.
“This extra administration and cost will put further pressure on beneficiaries to accept fire-sale prices on commercial properties in SIPPs to attract a buyer for the commercial property.”
These changes highlight the importance of reviewing how pension assets are structured within wider estate plans.
The Times: Inheritance tax on pensions could lead to a fire sale on properties.
Bowmore Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.