The UK's His Majesty's Revenue and Customs (HMRC) has published a technical note detailing significant reforms to the Inheritance Tax (IHT) treatment of pensions, set to take effect from April 6, 2027. The changes, legislated in the Finance Act 2026, will bring most unused pension funds and pension death benefits into the scope of IHT, treating them as part of a deceased person's estate.
The reforms are intended to address the increasing use of pension schemes for wealth transfer and to standardize the IHT treatment across different pension types. The technical note outlines how "notional pension property" will be identified, valued, and allocated to beneficiaries, and clarifies the responsibilities of personal representatives and pension scheme administrators in reporting and paying any IHT due. It also touches upon the use of withholding notices and a pensions direct payment scheme.
HMRC has indicated that further secondary legislation, guidance, and supporting materials will be published ahead of the April 2027 implementation. Draft regulations concerning information sharing requirements are expected for technical consultation in spring 2026, with the regulations themselves to be laid later that year. A clarification issued on May 29, 2026, specified that personal representatives will not be liable for additional tax on property covered by a clearance certificate.
What Happens Next
01HMRC will publish draft regulations on information sharing requirements for technical consultation in spring 2026.
02HMRC will lay regulations on information sharing requirements with a commencement date of April 6, 2027.
03HMRC will continue to develop guidance and supporting tools for the upcoming changes.
04Guidance and supporting materials will be published in spring 2027.
