IHT409

Pensions and Inheritance Tax from April 2027: what executors must do

Last checked 5 October 2026 against HMRC’s forms, guidance and the law · rules version 2026-10-05.1

From 6 April 2027, most unused pension funds and pension death benefits will count towards a person's estate for Inheritance Tax (Finance Act 2026 ss.66–71). For deaths from that date, the executors must get a value from each pension scheme, report it on the Inheritance Tax account, and work out and pay the tax relating to each scheme. Earlier deaths stay under the current rules.

What changes, and for which deaths

Finance Act 2026 added section 150A to the Inheritance Tax Act 1984 (IHTA). It treats a scheme member as owning "notional pension property" immediately before death: the unused funds and "death benefits" (lump sums or income) a scheme can pay because the member has died.

Most schemes are "discretionary" (the trustees choose who receives the benefits), which has usually kept them outside the estate. For deaths on or after 6 April 2027 (FA 2026 s.71), that no longer keeps them out (HMRC technical note 1, "TN1", §2.1).

Earlier deaths stay under the current rules, even if benefits are paid later (TN1 §1.2). But inherited pension money still in a beneficiary's drawdown account counts in their estate if they die on or after 6 April 2027 (HMRC technical note 2, "TN2", Example 8).

What counts, and what is left out

The "scheme administrator" (the organisation that runs the pension and pays benefits) values the notional pension property at the date of death (IHTA s.150A). It covers unused money in defined contribution pots (including drawdown funds), lump sum death benefits from final salary schemes, and guaranteed payments continuing after death.

These "excluded benefits" do not count (IHTA s.150A(6); TN1 §3.3):

death-in-service benefits linked to the job the person had when they died;
a dependants' scheme pension, such as a spouse's or child's pension, where it can only be paid in that form, and a "trivial commutation" lump sum replacing one;
a dependants' or nominees' annuity bought together with the person's own annuity, such as a joint-life annuity.

Pension benefits paid to a surviving spouse or civil partner, or to a charity, are exempt (IHTA s.18(3A) and s.23(5B)). The scheme still reports their value, and the executor claims the exemption on the account (TN1 §3.4). If the deceased was a long-term UK resident and the spouse is not, the spouse exemption is capped at £325,000 (IHTA s.18(2)).

What the executors must do

Find the pensions and ask for figures

HMRC expects executors to take reasonable steps to find every scheme, including any insurer paying a pension annuity (TN1 §2.5). Executors tell each scheme about the death and any surviving spouse or civil partner, with the identity evidence it asks for. Named executors can act before probate; where there is no will, a "prospective personal representative" (someone expecting to be appointed) can ask for the information (TN2 §3).

The schemes' deadlines, set by SI 2026/818, run in calendar days from a valid request (TN2 §4.1):

the value at the date of death: within 28 days, or an explained estimate, then the final value within 14 days of the scheme having it (TN1 §4);
the split between exempt beneficiaries and others: by the later of 28 days from the request or 14 days after the beneficiaries are decided (TN1 §5.2.2).

If a full account is needed, the executor also asks for each beneficiary's details and share, on the same timetable (TN2 §6.2).

Report, pay, and who else becomes liable

The pension values go on the IHT400 with the rest of the estate. Executors must also report the tax attributable to each scheme (HMRC impact note) and tell each scheme and its beneficiaries the tax on their part (consultation response, July 2025). A pension found later goes on a corrective account (TN1 §2.5).

Tax is due by the end of the sixth month after the month of death (IHTA s.226), with interest from the first day of the seventh month, currently 7.75% a year (since 9 January 2026). The account is due within 12 months from the end of the month of death (IHTA s.216(6)(a)). Tax due, including on pensions, must be paid before applying for probate (TN1 §10.1). See interest and late payment and paying before probate.

The executors are liable for the tax (IHTA s.210, substituted by FA 2026 s.67). A pension beneficiary becomes jointly liable once the benefits "vest" in them: when the trustees decide who receives what or, in a non-discretionary scheme, when the beneficiary is identified (TN1 §2.1–2.2). If executors pay tax on benefits vested in someone else and cannot deduct it from that person's inheritance, that person must repay them (IHTA s.211(3)).

Withholding and payment notices

Withholding notice

A withholding notice (IHTA s.226A, inserted by FA 2026 s.68) stops a registered pension scheme paying any beneficiary more than 50% of their share while it has effect. Excluded benefits and exempt beneficiaries, such as a spouse, are not affected.

Who: the executors, or a prospective personal representative.
When: only where they know, or have reason to believe, that tax may be due on the pension. HMRC says it is not for routine or precautionary use (TN1 §6.1).
How long: until it is withdrawn, the tax and interest on that scheme are paid, or 15 months after the end of the month of death, whichever is first (s.226A(7)).
How: one notice per scheme (draft template in TN2 Annex B). Beneficiaries are told who gave it. Money already paid out, or used to buy an annuity, cannot be held back.

HMRC's February 2026 newsletter said "up to 15 months from the date of death". This guide follows the Act and both technical notes: 15 months after the end of the month of death.

Whether to give a notice is the executor's decision. HMRC says withholding helps protect the executors and the rest of the estate from having to use non-pension assets to pay the tax (TN1 §6.1), but it delays part of the pension beneficiaries' money. Without a notice, schemes pay out once beneficiaries are decided.

Payment notice

A payment notice (IHTA s.226B; the "Pensions Direct Payment Scheme") makes a registered pension scheme pay tax and interest on its pension property straight to HMRC. The executors or a pension beneficiary can give one; a prospective personal representative cannot. It must be for an exact amount of at least £1,000, show tax and interest separately, quote the Inheritance Tax reference, and not exceed the tax owed or the benefits left. The scheme must pay within 35 days, beginning with the day it receives a valid notice (TN1 §7). It is optional, can be used before probate, and is separate from the Direct Payment Scheme for bank accounts.

Alternatively, executors can pay the pension tax from the estate and recover it from the pension beneficiaries, or a beneficiary can pay HMRC directly (consultation response). HMRC suggests executors and beneficiaries discuss the best way to pay (TN1 §7.3.4).

Reliefs and instalments

Tax on pension property cannot be paid by instalments, and business, agricultural and loss-on-sale reliefs do not apply. Quick succession relief does apply if the same pension money is taxed again within five years (TN1 §11.2).

There is one Inheritance Tax charge on the whole estate, pensions included. IHTA s.265 attributes the tax to each part "in the proportions which they bear to their aggregate", that is, in proportion to value (TN2 §5.2). HMRC has not published its detailed method, but has promised an online tool to work out the nil rate band attributable to pension property.

Excepted estates and clearance

Many estates need no full IHT400 because they are excepted estates. The government expects to amend the excepted estates regulations so that estates with pension property can qualify, in autumn to winter 2026 to 2027 (TN2 §1).

Executors can apply for clearance on form IHT30 once the account is sent and the tax paid, but not before 12 months after the death and 3 months after receiving the probate unique code (TN2 §10.2). After clearance, executors are not liable for tax on pensions found later unless they were careless (IHTA s.239(4A)); pension beneficiaries remain liable.

HMRC's estimate of estates affected

HMRC's tax information and impact note (26 November 2025) says: "Most estates will continue to have no Inheritance Tax liability after 6 April 2027." It estimates that, of around 213,000 estates with inheritable pension wealth in 2027 to 2028, 10,500 will have a liability where previously they would not, and around 38,500 will pay more. HMRC says these static estimates "should be viewed as a maximum".

Worked example: a death on 10 May 2027

In this hypothetical example, a married person dies, survived by their spouse (both long-term UK residents) and an adult daughter. Everything not shown, including the home, passes to the spouse and is exempt, so the residence nil rate band is not used. There are no lifetime gifts and no transferred nil rate band.

Item	Value	Paid to	Counts towards tax
Savings and investments, after funeral costs	£300,000	Daughter, under the will	Yes
Personal pension (unused drawdown fund)	£200,000	Daughter, chosen by the trustees	Yes
Workplace pension pot	£150,000	Spouse	No: spouse exemption

Total chargeable value: £300,000 + £200,000 = £500,000
Less the £325,000 nil rate band: £175,000
Tax at 40%: £70,000

Illustrative only: HMRC has not published its apportionment method. Shared in proportion to chargeable value:

free estate: £300,000 ÷ £500,000 × £70,000 = £42,000
personal pension: £200,000 ÷ £500,000 × £70,000 = £28,000
workplace pension paid to the spouse: £0

Tax is due by 30 November 2027, interest runs from 1 December 2027 and the IHT400 is due by 31 May 2028. A withholding notice, if the executor chose to give one, could hold back up to £100,000 of the personal pension until 31 August 2028 at the latest (the newsletter's wording would suggest 10 August 2028). A payment notice could cover that scheme's share of the tax (£28,000 in this illustration).

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What HMRC has not published yet (as of 5 October 2026)

The law is in place, but these pieces are still missing:

The apportionment method between the free estate and each scheme. HMRC has promised an online tool, and guidance is due in spring 2027.
HMRC's "Inheritance Tax Checker Tool", promised in November 2025 "to advise whether Inheritance Tax is due". It was not available when we checked on 5 October 2026.
The forms. We have found no HMRC statement on whether the IHT400 or Schedule IHT409 will be replaced or revised for deaths from 6 April 2027. The IHT409 page was last updated on 28 September 2023.
Excepted estates. The amended regulations for estates with pension property have not been made.
HMRC's digital Inheritance Tax service, which "will go live from 2027 to 2028". No firmer date has been given.
Final notice templates and identity guidance. Only drafts exist (TN2 Annexes A to C).

This site's pensions module stays switched off until HMRC publishes the final forms. We will update this guide when HMRC publishes and list each update under rule changes. If you would like to be told, you can leave your e-mail address below.

If the death was before 6 April 2027

Schedule IHT409 goes with the IHT400 if the person had a pension other than the State Pension. It covers payments continuing after death, death benefits, and transfers, changes and contributions in the two years before death. A death benefit is included in IHT400 box 56 unless the trustees had discretion over who received it (IHT409, questions 12 and 15). See how to fill in the IHT400.

Common questions

Do unused pensions count for Inheritance Tax from April 2027?

Yes, for deaths on or after 6 April 2027 most unused pension funds and pension death benefits count towards the estate (Finance Act 2026, new IHTA section 150A). Death-in-service benefits, dependants’ scheme pensions and certain joint-life annuities are excluded, and benefits paid to a spouse, civil partner or charity are exempt.

What if the person died before 6 April 2027?

The current rules apply, even if the pension is paid out after that date. Pensions are reported on Schedule IHT409 with the IHT400, and a death benefit paid at the trustees’ discretion is not added to IHT400 box 56.

How quickly must a pension scheme give the executor a value?

Within 28 days of a valid request, as an explained estimate if the final figure is not ready (SI 2026/818). The split between exempt and other beneficiaries is due by the later of 28 days from the request or 14 days after the beneficiaries are decided.

What is a pension withholding notice?

A notice under IHTA section 226A that stops a registered pension scheme paying any non-exempt beneficiary more than 50% of their share, where the executors know or have reason to believe tax may be due. It lasts until it is withdrawn, the tax is paid, or 15 months after the end of the month of death, whichever is first. Whether to give one is the executor’s decision.

Can the pension scheme pay the Inheritance Tax directly?

Yes. The executors or a pension beneficiary can give the scheme a payment notice for an exact amount of at least £1,000, and the scheme must pay HMRC within 35 days, beginning with the day it receives a valid notice (IHTA section 226B).

How is the tax shared between the estate and the pension schemes?

The law shares the tax in proportion to value (IHTA section 265), but as of 5 October 2026 HMRC has not published its detailed apportionment method or its promised online tool. Any split worked out now is illustrative only.