The rules on pensions and inheritance tax change on 6 April 2027. That raises an important question for families. Who pays inheritance tax on a pension from April 2027? At Hart Reade Solicitors, our Private Client team in Eastbourne, Hailsham and Polegate prepares Wills and deals with Probate and the administration of Estates. Below we explain what is changing, who will be responsible for the tax and what you can do now.
The answer is your personal representatives. These are the executors named in your Will or, if there is no Will, the administrators of your Estate. For deaths on or after 6 April 2027, they will be responsible for reporting and paying any inheritance tax due on unused pension funds and pension death benefits.
Our Private Client team can talk you through what the change means for your family. Call us on 01323 727321 or email info@hartreade.co.uk.
What is changing on 6 April 2027?
From 6 April 2027, most unused pension funds and pension death benefits will count as part of a person’s Estate for inheritance tax. The change was made by the Finance Act 2026, which received Royal Assent on 18 March 2026.
At the moment, most pension schemes are discretionary schemes. Unused money in these schemes can usually pass to the people you leave it to without any inheritance tax. That will no longer be the case for deaths from 6 April 2027.
Did the rules change after they were first announced?
Yes. When the Government first consulted on the change, it proposed that pension scheme administrators would report and pay the tax. In July 2025 it confirmed that personal representatives would take on that job instead.
We wrote about the original proposals in our April 2025 article, How New Rules Surrounding Pensions Could Affect Your Estate. The confirmed position is the one set out here.
Which pensions are not affected?
Some pension benefits stay outside inheritance tax.
- Death in service benefits paid from a registered pension scheme
- Dependants’ scheme pensions from a defined benefit arrangement or a collective money purchase arrangement
The existing exemptions also continue. Pension money passing to a surviving spouse or civil partner, or to a registered charity, is still exempt from inheritance tax.
Will my Estate have to pay inheritance tax on my pension?
Most Estates still will not. The Government estimates that around 213,000 Estates will include pension wealth that can be inherited in 2027 to 2028. Of those, it expects about 10,500 to pay inheritance tax for the first time and about 38,500 to pay more than they would have done.
For the Estates that are affected, the Government expects the average inheritance tax bill to rise by around £34,000 once pensions are included.
What will executors have to do?
Executors will take on new work when someone with a pension dies. They will need to find every pension the person had and collect information from each scheme and from the people due to receive the money. Where an inheritance tax account is needed, they will report the pensions on it and show how much of the tax relates to each scheme.
There will be some help with paying. Executors will be able to ask a pension scheme to pay the inheritance tax due on that pension directly, or to repay tax the executors have already paid.
Executors will also be able to ask a scheme to hold back part of the money. If they do, the people inheriting the pension can only receive 50% of it for up to 15 months after the death, so there is enough left to cover any tax.
If a pension turns up after HMRC has given the executors a clearance certificate, the executors will not be liable for the tax on it, as long as HMRC is satisfied they made every effort to find all the pensions.
HMRC has said it will publish guidance, templates and an online tool to check whether inheritance tax is due before 6 April 2027.
What does it mean for the people who inherit a pension?
The people who inherit a pension will usually share responsibility for the inheritance tax due on it with the executors. If a pension is only found after the executors have their clearance certificate, the people inheriting it will be solely responsible for any tax on that pension. They may also need to make choices about how and when the tax is paid on what they receive.
What can you do now?
There are a few practical steps worth taking before April 2027.
- Keep a list of every pension you have, with the scheme names and where the paperwork is kept, so your executors can find them. Our Later Life Planning service can help you get your affairs in order.
- Think about who you have named as executors in your Will, because they will carry these new responsibilities.
- Review your Will with your whole Estate in mind, including your pensions. Our article on how the 2026 inheritance tax changes affect families, farms and business owners covers the other changes that took effect this year.
- Speak to your financial adviser about how you draw your pension. We work closely with financial advisers so that legal and financial planning fit together.
How Hart Reade Solicitors can help
Our Wills team can advise on inheritance tax planning as part of your Will, including simple Trusts where they suit your aims. If you are an executor, our Probate team can tell you whether inheritance tax is likely to be due, how it is worked out and how it can be paid. We can also deal with the full administration of the Estate on your behalf.
To arrange an appointment, call our Eastbourne office on 01323 727321, Hailsham on 01323 841481 or Polegate on 01323 487051. You can also email us at info@hartreade.co.uk.
So, who pays inheritance tax on a pension from April 2027? In most cases it will be the executors, using money from the Estate or the pension itself. Planning ahead now makes that job easier for the people you leave behind.
This article is general information about the law in England and Wales. It is not advice on your own circumstances. Please speak to us before you act on it.
Sources
Official guidance
The change, the exclusions, the process for executors and the Government’s estimates, HMRC policy paper, Inheritance Tax unused pension funds and death benefits.
Royal Assent of the Finance Act 2026 on 18 March 2026, reported by Shoosmiths, 24 March 2026.
HMRC’s technical note and timetable for guidance and tools, reported by ICAEW, 18 May 2026.
Law referred to in this article
Inheritance tax is charged under the Inheritance Tax Act 1984. The pension changes were made by sections 65 to 71 of the Finance Act 2026.
Last reviewed 13 October 2026.
Please note the above is for information purposes only and is intended to be a short summary. It should not be treated as a comprehensive guide and should not be acted on without qualified legal advice.
