Pension Inheritance Tax Changes From April 2027

What gov.uk actually says, verbatim

Published by HM Treasury on 26 November 2025, the policy paper “Inheritance Tax: unused pension funds and death benefits” sets out the change without hedging: most unused pension funds and death benefits move “into scope of Inheritance Tax from 6 April 2027.” This is a confirmed measure with a fixed date, not a consultation proposal — the technical detail of exactly how it operates has gone through its own consultation, but the date and the principle are settled.

One exclusion gov.uk names specifically

Not every pension-linked payment is caught. The same policy paper states: “All death in service benefits payable from a registered pension scheme will be excluded” from the estate for Inheritance Tax purposes. Death-in-service benefits paid through an employer's registered scheme sit outside the new rules even after April 2027 — it's specifically unused pension funds (money left in a pension pot that was never drawn down) and most other death benefits that come into scope.

Who has to report and pay it

This is the part that changed during the policy's development, and it matters for who does the paperwork. gov.uk's current position: “Personal representatives will be liable for reporting and paying any Inheritance Tax due on unused pension funds and pension death benefits.” That's the executor or administrator of the estate — not, as an earlier draft of the policy proposed, the pension scheme administrator directly. To get the tax paid before pension funds are released, personal representatives “may direct pension scheme administrators to withhold 50% of taxable benefits for up to 15 months” and remit that to HMRC before releasing the remainder to beneficiaries.

What this means for a landlord's wider estate

Pensions have, until now, been one of the few common assets that sat entirely outside the Inheritance Tax calculation — a genuine reason many landlords and other savers have been advised to draw down other assets (including selling or gifting rental property) before touching a pension. From 6 April 2027, that advantage narrows: an unused pension pot will be added to the same net-estate total as the family home, savings and any buy-to-lets (which already get no relief — see our guide to IHT on rental property). For an estate already close to or over the £325,000 / £175,000 thresholds, that can turn a previously untaxed pension into a 40% liability overnight once the rule takes effect.

What this page does not cover

The mechanics of exactly how pension scheme administrators, personal representatives and HMRC will exchange information and payment before April 2027 were still being finalised through technical consultation at the time of writing, and we haven't reproduced draft process detail that could still change before the rule takes effect. For the current, evolving detail, gov.uk's own policy paper and its linked technical notes are the primary source — check them directly rather than relying on secondary summaries (including this one) for anything time-critical.

This is a guide, not financial, tax or legal advice. Figures are estimates from the published rates and thresholds, which change with each Budget. Your own position depends on facts a guide can't see — check anything that matters against gov.uk guidance or a qualified adviser before you act on it.

gov.uk / HM Treasury: Inheritance Tax — unused pension funds and death benefits (policy paper, published 26 Nov 2025), read verbatim 11 Sep 2026 · gov.uk: Inheritance Tax. Matches site/taxdata.py's “pensions_in_estate_from”: 2027-04-06 — no conflict found. The detailed reporting mechanics between pension schemes, personal representatives and HMRC were still subject to technical consultation at the time of writing and are not reproduced here.