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Pensions and Inheritance Tax from 6 April 2027: what executors need to know

Last checked 25 October 2026 against GOV.UK and legislation.gov.uk. General information, not legal or tax advice. England and Wales.

For deaths on or after 6 April 2027, most unused pension funds and lump sum death benefits count towards the value of the estate for Inheritance Tax. Executors (personal representatives) are responsible for reporting them and paying any tax. Here is what that means in practice.

The change in one paragraph

Until now, most pensions have sat outside the estate for Inheritance Tax: the scheme paid death benefits straight to the people it chose, and executors rarely needed exact figures. The Finance Act 2026 (Royal Assent 18 March 2026) changes that for deaths on or after 6 April 2027. Unused defined contribution pots, drawdown funds left at death and most lump sum death benefits are added to the estate’s value when working out the tax. The money is still paid by the scheme to its beneficiaries, not through the will, but the tax on it becomes part of the executors’ job.

What’s in and what’s out

Counts towards the estate for IHT	Stays out
Unused defined contribution pots Drawdown funds left at death Most lump sum death benefits, including those paid at the trustees’ discretion	Death in service benefits Dependants’ scheme pensions (taxed as income instead) Benefits paid to a surviving spouse or civil partner (exempt) Lump sums paid to a charity

Deaths before 6 April 2027 follow the old rules, even if the scheme pays out after that date.

Who does what

Personal representatives report pension funds and death benefits to HMRC with the rest of the estate, and pay any Inheritance Tax due on them. The government dropped its earlier plan to make scheme administrators liable.
Withholding notice. Personal representatives (or someone about to become one) can tell a scheme to hold back up to 50% of the benefits that may be taxable while the tax is worked out. It lasts until the tax is paid, the notice is withdrawn, or 15 months after the end of the month of death, whichever comes first. Exempt and excluded benefits aren’t held back.
Payment notice. Anyone liable for the tax, including personal representatives and beneficiaries, can tell the scheme to pay tax due on a benefit straight to HMRC (£1,000 or more), so it doesn’t have to come out of the rest of the estate first. The scheme then has 35 days to pay.
Information. Regulations made in July 2026 (in force from 6 April 2027) give a scheme 28 days, starting from the day it receives a personal representative’s request, to send the scheme details and the value of benefits that may be taxable. So the sooner you write, the sooner the clock starts.

The payment deadline doesn’t move: Inheritance Tax is still due by the end of the sixth month after the month of death, with interest after that. Pension figures now have to arrive in time for that date, which is why it pays to write to every scheme early and chase promptly. Our deadline calculator gives you both dates.

What to do as an executor

Find every pension. Old payslips, P60s, bank statements showing contributions, annual statements in the post, and the government’s free Pension Tracing Service.
Write to each scheme. Ask for the value at the date of death, what death benefits are payable and to whom, whether any of it counts towards the estate for Inheritance Tax, and anything they need from you. Here’s a letter you can use.
Keep a chase date. Note when each letter went and chase after four weeks if nothing has come back.
Record the figures. Keep each scheme on your list of assets, marked as paid outside the estate, so you can see the full picture for Inheritance Tax even though the money won’t pass through the estate account.
Ask for help if the numbers are big. If the estate is likely to owe tax, the pension figures can make a large difference. A solicitor, accountant or probate practitioner can check your position.

How Executor’s Cashbook helps

It keeps each pension on the estate’s register alongside everything else (marked as paid outside the estate), writes the letter to the scheme, puts a four-week chase date on the deadline board, and shows the Inheritance Tax payment date for the date of death. It doesn’t work out tax, fill in HMRC forms or tell you whether tax is due.

Questions

Does the change apply if the person died before 6 April 2027?

No. It applies to deaths on or after 6 April 2027. For earlier deaths the old rules apply, even if the scheme pays out later.

Will the pension money go through the estate account now?

Usually not. The scheme still pays death benefits to the beneficiaries it chooses or the member nominated. What changes is that the value counts towards the estate for working out Inheritance Tax, and personal representatives deal with reporting and paying it.

Is a pension left to my spouse taxed?

Benefits paid to a surviving spouse or civil partner are exempt from Inheritance Tax, as other gifts to a spouse are.

Is there still income tax on inherited pensions?

It can be. Income tax can still apply, for example where the member died aged 75 or over. The rules include provisions so the same money isn’t taxed twice in full. Check with the scheme or HMRC.

Do I need to send an IHT400?

It depends on the whole estate, including the pension figures. GOV.UK’s guide to valuing the estate explains when a full account is needed.

Keep the estate’s records in one place. Executor’s Cashbook holds the assets and debts, every payment in and out, the distributions and the deadlines, and turns them into estate accounts for the beneficiaries. It runs in your browser and your records stay on your device. Free for up to 10 items.

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This guide is general information about the rules in England and Wales, checked on 25 October 2026. It isn’t legal or tax advice, and rules change: check GOV.UK, or ask a solicitor or probate practitioner about your situation.