Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Death benefits definition

What does Death benefits mean? Death benefits are payments or entitlements triggered by a member’s death under an occupational or personal pension scheme, or a death-in-service life policy. They commonly take the form of a lump sum death benefit, a survivors’/dependants’ pension (for a spouse, civil partner or children), or a refund of contributions or AVCs. The phrase is descriptive across pensions and life assurance; specific categories (for example, lump sum death benefit) are defined in UK and Irish tax legislation and guidance. Eligibility, form and amount are determined by the scheme’s trust deed and rules or contract terms, subject to overriding pensions and...

UK death benefits in registered final salary (defined benefit) occupational pension schemes: authorised payments, survivor pensions and lump sums, two-year rule, RBCEs, and 2027 IHT changes

Published by a LexisNexis Pensions expert

Practice notes

FORTHCOMING CHANGE:

The Finance Bill 2025–26 proposes that, from 6 April 2027, unused pension funds and Death benefits will be treated as part of a deceased member’s estate, and thereby fall within the inheritance tax (IHT) regime. These rules will not extend to death-in-service benefits paid to active members in relevant employment, nor to a dependant’s scheme pension (meaning a DB scheme spouse’s or dependant’s pension). The standard exemptions, including those for spouses and civil partners, will continue to apply. Personal representatives will be chiefly responsible for paying any IHT arising. For further information, see the following:

Practice Note: Inheritance tax and pensions
News Analyses: HMRC—Reforming inheritance tax—unused pension funds and death benefits
HMRC confirms new IHT rules on unused pension funds to apply from 6 April 2027
HMRC policy paper: Inheritance Tax: unused pension funds and death benefits (November 2025)

This practice note applies only to registered Final salary occupational pension schemes. Most pension schemes provide for benefits upon the death of members...

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Web page updated on 22/05/2026

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