Overview
- HMRC has confirmed that from April 6, 2027 most defined-contribution pension pots and many pension death benefits will be included in a deceased person’s estate for inheritance tax at the standard 40% rate.
- Personal representatives and executors will be legally responsible for finding pensions, obtaining valuations from providers, calculating any IHT due and reporting the full values to HMRC through a new online system.
- HMRC requires pension providers to share information earlier using proof such as a death certificate rather than waiting for probate, and schemes may withhold up to 50% of death benefits while tax is settled.
- The government estimates roughly 10,500 estates will pay IHT for the first time and about 38,500 will pay more, and industry commentators warn some families could face large extra bills and heavy administrative strain.
- Officials say an HMRC online calculation and reporting tool will be launched before April 2027, and earlier plans to make pension scheme administrators handle reporting were dropped after practical concerns raised by PSAs.