When exactly do pensions come into inheritance tax?

6 April 2027. Unused pension funds and death benefits come into the scope of inheritance tax from that date, and personal representatives are responsible for reporting and paying any tax due.

Is a pension left to my spouse taxed?

No. The existing inheritance tax exemptions for a surviving spouse or civil partner, and for registered charities, are maintained. Death in service benefits from a registered pension scheme are also excluded from the estate.

I am an executor and I do not know what pensions the deceased had. Where does that leave me?

In a common position, and it is why this needs starting early. Tracing schemes, obtaining valuations and reading the death benefit nominations all take time, and from April 2027 that work has to happen before the pension is distributed rather than after.

Pensions, Inheritance Tax and the 2027 Change

Q: Can I hold back pension money to pay the tax?

Yes. Where you reasonably expect inheritance tax to be due, you can direct the scheme administrator to withhold 50% of the taxable benefits for up to 15 months from the date of death, settle the tax with HMRC, and release the rest afterwards.

Written and reviewed by the Trust Tax Accountants editorial team. Last reviewed 22 August 2026.

What is due: Unused pension funds and death benefits come into the scope of inheritance tax
By when: 6 April 2027
If it is missed: Personal representatives are liable for reporting and paying the tax, not the pension scheme

If you are an executor or administrator, this is the change that should have your attention. From 6 April 2027 unused pension funds and death benefits come into the scope of inheritance tax, and the responsibility for reporting and paying that tax sits with the personal representatives of the estate.

That is not where the liability was originally going to land. The first proposal put it on pension scheme administrators. It was moved. You are now on the hook for tax on an asset that, until this change, sat outside the estate entirely and that you may have no control over.

What Changes on 6 April 2027

Unused pension funds and death benefits become part of the estate for inheritance tax. HMRC's published measure sets out the scope and the mechanics.

Two things are carved out and both matter. Death in service benefits payable from a registered pension scheme are excluded from the value of the estate. And the existing exemptions for benefits passing to a surviving spouse or civil partner, or to a registered charity, are maintained. So a pension left to a spouse does not create a charge; a pension left to adult children may.

HMRC's own estimate of the impact is worth knowing when you are judging whether this reaches your estate. Of roughly 213,000 estates with inheritable pension wealth in 2027 to 2028, around 10,500 are expected to have an inheritance tax liability where previously they would not have, and around 38,500 to pay more than they otherwise would.

Why This Is a Personal Representative's Problem

A personal representative is personally liable for getting the estate's tax right. That was already true, and it is why the role is heavier than most people expect when they agree to be an executor. What the 2027 change does is add an asset class that is difficult to value quickly, often held with a provider who has no obligation to you, and frequently already earmarked in the family's mind for a particular beneficiary.

The practical difficulty is timing. Beneficiaries expect pension money to arrive quickly, because historically it did. From April 2027 you may need to establish an inheritance tax position before the money is released, and you will be the one explaining the delay.

The 50% Withholding Route

There is a mechanism built for exactly that problem. Where personal representatives reasonably expect inheritance tax to be due, they can direct the pension scheme administrator to withhold 50% of the taxable benefits for up to 15 months from the date of death, pay the inheritance tax due to HMRC, and release the balance to the beneficiaries afterwards.

It is a protection, not a formality. Using it means forming a view early about whether tax is likely, which means valuing the estate properly before the pension is distributed rather than afterwards. Getting that sequence right is most of the work, and it is the part we take on when an estate has pension assets in it.

What to Do Before April 2027

If you are administering an estate now, the change may still reach you: it applies by reference to the date of death, so estates with deaths on or after 6 April 2027 are in scope. If you are acting for a family where a death is not imminent but likely, the useful work is knowing which pensions exist and what their death benefit nomination says.

If you are a trustee rather than an executor, the connection is the inheritance tax computation itself. Estates and trusts share the same nil-rate band arithmetic, and where a will trust is involved the relevant property charges run alongside the estate position rather than instead of it.

The professional bodies have tracked this measure closely through consultation, and the ICAEW Tax Faculty is a reliable place to follow how the reporting mechanics settle before the start date.