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Welcome to the August 2025 edition of the HMRC Trusts and Estates Newsletter.

We do not have a mailing list for the newsletter.

Reforms to Inheritance Tax, agricultural property relief and business property relief

The technical consultation on reforms to agricultural property relief and business property relief to Inheritance Tax (IHT) in relation to trusts closed in April 2025.

On 21 July 2025, the government published a policy paper with draft legislation on the reforms. Read about reforms to agricultural property relief and business property relief.

You can send feedback on the draft legislation by emailing aprbpr.consult@hmrc.gov.uk.

The consultation on the draft legislation will close on 15 September 2025.

Reforms to Inheritance Tax on pensions

We published a technical consultation on 30 October 2024 seeking views on the administrative proposal to make pension scheme administrators responsible for reporting and paying any IHT due on pensions to HMRC. We are grateful for the many helpful responses received.

On 21 July 2025 (Legislation Day), the government published its response, Inheritance Tax on pensions: liability, reporting and payment. This sets out that, in response to the consultation, personal representatives, not pension scheme administrators, will be liable for reporting and paying IHT on unused pension funds and death benefits. The government has also confirmed that, from 6 April 2027, all death in service benefits payable from registered pension schemes will be out of scope of IHT, regardless of whether the pension scheme is discretionary or non-discretionary.

The response document includes the high-level process for typical estates.  has been published for technical consultation. The consultation mailbox is open for feedback on the legislation until 15 September 2025 — ihtonpensions@hmrc.gov.uk.

The government will publish further draft legislation in due course on the changes required to the information sharing regulations.

New dedicated Bereavement Service phone number and postal address

Bereaved customers or their representatives can call the new dedicated Bereavement Service to:

• report a death
• settle all the deceased’s tax affairs up to the date of death
• ask about informal administration period tax

The new number will use voice response messages to direct callers to the appropriate advisers for PAYE, Self-Assessment or Child Benefit. This will ensure the customers reach the right team first time to discuss issues in a single call.

We will continue to route any customers that continue to use the existing numbers to Bereavement advisers using the speech recognition platform.

Customers should continue to use the BX9 1AS postcode for formal tax returns for the administration period.

Estates informal arrangements and tax-free amount

The March 2024 Newsletter described the tax-free amount for trust and estates introduced in Finance (No. 2) Act 2023. For estates, a £500 tax-free amount came into effect for the tax year 2024 to 2025 onwards.

HMRC are receiving incorrect calculations for non-complex estates using the informal arrangements. We are rejecting these calculations due to the incorrect use of this £500 tax-free amount for income before tax year 2024 to 2025.

For income in tax years before 2024 to 2025, the income is tax-free if the estate only has savings income for the whole of the administration period and the total of that income over that period does not exceed £500.

For income in tax years from 2024 to 2025, the new £500 tax-free amount applies separately in relation to each year. Where taxable income exceeds that amount:

• tax will be payable on the full amount — the £500 tax-free amount should not be deducted from the income
• unused amounts do not roll over to subsequent years

Any calculation sent to HMRC should include a year-by-year breakdown of the income received. Read guidance on reporting an estates’s income to HMRC.

Trusts and Estates Tax Return 2025 — reminder to complete ‘Question 9B.1’

The Trust and Estate Tax Return for the year ended 5 April 2025 has changed. Question 9B.1 asks you to confirm the number of other trusts made by the settlor. This is because the new £500 exemption is divided if the settlor has made more than one trust. Read guidance on the SA900 form and notes.

Some key points on the new £500 exemption are:

• the £500 income exemption applies per trust or estate
• if a settlor created multiple trusts, the £500 limit is divided equally among them, with a minimum of £100 per trust

Exemptions from this reduction include:

• settlor-interested trusts
• vulnerable beneficiary trusts
• registered pension trusts
• heritage maintenance trusts

Read more detailed guidance in section ‘Q9B Trust tax free amount’ of the Trust and Estate Tax Return Guide (2025).

Residence based tax regime

On 21 July 2025, the government confirmed technical fixes to legislation contained in the Finance Act 2025. These fixes replaced the special tax rules relating to domicile and will be included as part of the 2026 Finance Bill to ensure that the legislation works as intended.

The government also published a summary of responses to the Personal Tax Offshore Anti-Avoidance call for evidence which ran from 30 October 2024 and 19 February 2025. They are exploring options to make the rules simpler to apply in practice.

The government will consider how best to engage with relevant experts in shaping and taking forward further consultation in this area and provide an update in the Autumn.

Trust Registration Service — response to consultation

Between March 2024 and June 2024, HM Treasury consulted on proposals to improve the effectiveness of the Money Laundering Regulations, which included proposed changes to the regulations that apply for registering trusts. The government has published its response to that consultation.

Read about the consultation outcome Improving the effectiveness of the Money Laundering Regulations.