HMRC 2027 rule triggers power-of-attorney alert — Birmingham Live urges people to review/renew POAs

Birmingham Live reported on May 24 that people should review their power-of-attorney arrangements before a major HMRC inheritance-tax change takes effect in 2027. The article tied that warning to the government’s plan to bring most unused pension funds and death benefits into the scope of inheritance tax from April 6, 2027. HM Revenue & Customs set out that policy in a paper published on November 26, 2025. The issue raised by the report was not only tax, but who can act if a person loses mental capacity before their affairs are settled. ### Which HMRC change is driving the warning? HMRC said the new rule will bring most unused pension funds and death benefits into the value of an estate for inheritance-tax purposes from April 6, 2027. The policy paper also says death-in-service benefits paid from a registered pension scheme will be excluded from the estate value under the new rules. (gov.uk) Royal London said personal representatives will be responsible for reporting and paying any inheritance tax due on unused pension funds and death benefits from that date. That means executors and families may need to gather pension information alongside the rest of an estate’s records. (gov.uk) ### What does a lasting power of attorney actually do? The UK government says a lasting power of attorney allows a person to appoint someone to make decisions on their behalf. GOV.UK says a property and financial affairs LPA can cover tasks such as managing bank accounts, paying bills, collecting benefits or a pension, and selling a home. The Office of the Public Guardian says the registration fee is £92 for each LPA. (adviser.royallondon.com) Its guidance says the total government fee is £184 if a person registers both a property and financial affairs LPA and a health and welfare LPA, before any fee reduction or exemption. ### Why is Birmingham Live telling people to review existing documents now? (gov.uk) Birmingham Live’s report said one risk is assuming an old document will still work when a family needs it. GOV.UK says an LPA must be registered with the Office of the Public Guardian before it can be used, and HMRC says a power of attorney can be used to let someone deal with tax affairs on another person’s behalf. (publicguardian.blog.gov.uk) The practical issue is timing. HMRC’s pension inheritance-tax change does not start until April 2027, but incapacity can happen earlier, and an unregistered or outdated document may slow down access to accounts, records and tax administration. That is an inference from the government’s LPA and tax guidance. ### What is the problem for people with assets or family in Spain? (gov.uk) The Spanish Consulate in London says powers of attorney can be granted by Spanish or foreign citizens to authorize an agent to carry out legal acts in Spain, including inheritance matters, opening and managing bank accounts, and making payments. The consulate describes these as formal powers used for business and legal acts in Spain. (gov.uk) GOV.UK’s Spain notarial-services guidance says people in Spain can use consular and document-legalisation services for documents that need to be recognized there. Legal practitioners who advise on cross-border estates say a UK LPA may still need separate recognition steps or a Spanish notarial power before it can be used smoothly in Spain. (exteriores.gob.es) ### Does that mean a UK LPA is useless in Spain? Spanish and UK official guidance does not say every UK LPA is automatically useless in Spain. But the sources do show that Spain treats powers of attorney as formal notarial instruments for use in Spanish legal and property matters, and cross-border recognition can require additional steps. (gov.uk) For people with Spanish property, bank accounts or inheritance issues, the next step is likely to be document review rather than assumption. From April 6, 2027, HMRC’s new pension inheritance-tax rules are due to begin, and the relevant UK documents are on GOV.UK and through the Office of the Public Guardian. (gov.uk) (exteriores.gob.es)