Jurisdiction(s):
United Kingdom

Inheritance tax and pensions: UK rules on contributions, benefits and death benefits, with Finance Act 2026 reforms bringing unused funds into the estate from 6 April 2027

Published by a LexisNexis Pensions expert

Practice notes

STOP PRESS

On 11 May 2026, HMRC issued a new technical note, inheritance tax on pensions. It explains the inheritance tax (IHT) changes made by the Finance Act 2026 for deaths on or after 6 April 2027. The note outlines how notional pension property will be pinpointed, assessed and apportioned to beneficiaries, who must report and settle any IHT due, how withholding notices and the pensions direct payment scheme will work, and how the reforms dovetail with existing income tax rules on pension death benefits. The government is expected to bring forward supporting secondary legislation on information-sharing duties later this year. HMRC will provide guidance, supplementary materials and interactive tools for personal representatives by April 2027. This Practice Note is being revised to incorporate the technical note. For more detail, see LNB News 11/05/20026 40. This Practice Note explains how IHT rules apply to the build-up and payment of benefits from HMRC-registered occupational and personal pension schemes. Importantly, reforms are in train to draw unused pension funds and death benefits into IHT (with some exceptions) with effect from 6...

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Kevin Gude

Keystone Law

A group risk benefits and pensions law expert who advises employers, trustees, insurers and employee benefit consultancies. Over a career of more than 35 years, he has worked with employers’ finance, risk and HR teams on the design, implementation and revision of their businesses’ trust and contract-based benefit plans, including life assurance, medical and pension schemes.Kevin’s reputation in his field has led many international businesses to turn to him for specialist, off-panel advice. His expertise includes providing specialist advice to insurers and other third-party product providers in the review and modernisation of the governing documentation and delivery of their health benefit and group risk products, and advising on legal and regulatory compliance details associated with customer-facing materials for new financial service products....

Web page updated on 21/05/2026

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