How will pension schemes report death benefits to HMRC from 2027?

From 6 April 2027 most unused pension funds and death benefits paid by registered pension schemes will count as part of the deceased person's estate for inheritance tax. The reporting chain works like this: the executor (formally the personal representative) notifies each pension scheme of the death, the scheme administrator must respond with a valuation of the unused funds and death benefits within four weeks, the executor includes those figures in the estate's inheritance tax account, and any tax attributable to the pension can then be paid either by the beneficiaries or directly by the scheme to HMRC. The legal responsibility for reporting and paying the tax sits with the personal representative, not the scheme.

That single paragraph is the answer most people are looking for, but if you are actually administering an estate you will want the detail: what exactly the scheme must tell you, what happens if it is slow, and how the tax physically gets paid when the money is sitting inside a pension you cannot touch. This guide covers each step for deaths on or after 6 April 2027, written for executors rather than pension professionals. If you have not yet worked out whether the estate you are handling is likely to owe tax on a pension at all, the free pensions IHT 2027 estimator gives you a ballpark liability in about two minutes, which tells you how much of what follows you actually need. This guide covers England and Wales, though the pension changes themselves apply UK-wide.

What changes on 6 April 2027

Under current law, most defined contribution pension pots sit outside the estate for inheritance tax, because death benefits are usually paid at the discretion of the scheme trustees. The government announced at Autumn Budget 2024 that this ends for deaths on or after 6 April 2027: unused pension funds and most death benefits will be included in the value of the estate, taxed at the standard 40% rate to the extent the estate exceeds the available nil-rate bands.

HMRC estimates that around 10,500 estates a year will become newly liable for inheritance tax because of the change, and a further 38,500 estates that would have paid some IHT anyway will pay more, with an average increase of around £34,000. Two important carve-outs survive: death in service benefits paid from registered pension schemes are excluded from the charge, and anything passing to a surviving spouse or civil partner remains covered by the ordinary spouse exemption. The full scope of who is caught, and the figures behind it, are set out in our data briefing on pensions and inheritance tax in 2027.

This article is about the mechanics of reporting rather than who is affected. The design of those mechanics changed significantly between the original proposal and the final rules, which is worth understanding because older articles describe a system that was abandoned.

Who reports what: the scheme's duty and the executor's duty

HMRC's original 2024 consultation proposed making pension scheme administrators liable for reporting and paying the IHT on pensions themselves. The pensions industry pushed back hard, pointing out that no single scheme can know the estate's overall position. In its consultation response on liability, reporting and payment, published in July 2025, the government reversed course: personal representatives, not scheme administrators, are responsible for reporting and paying any inheritance tax due on unused pension funds and death benefits.

What remains on the scheme's side is an information duty. Once a scheme administrator is notified of a member's death, it must provide the value of the unused pension funds and death benefits within four weeks. Draft information-sharing regulations, consulted on during 2026, flesh out exactly what schemes and personal representatives must tell each other and when. The headline duties break down like this.

Who	Must do what	By when
Executor / personal representative	Notify each pension scheme of the death and identify themselves as the PR	As early as possible (the clock below starts on notification)
Scheme administrator	Provide the value of unused pension funds and death benefits, and say whether any part is exempt (for example, passing to a spouse)	Within four weeks of being notified of the death
Executor / personal representative	Include the pension values in the estate's IHT account and report to HMRC	Within the normal IHT deadlines for the estate
Scheme administrator (if instructed)	Pay IHT attributable to the pension direct to HMRC, or withhold up to 50% of a benefit for up to 15 months	On the beneficiary's or PR's instruction

Notice the shape of this. You do not wait for the scheme to deal with HMRC, because it will not. The scheme's job is to hand you numbers; your job is to put those numbers into the estate's tax account alongside the house, the bank accounts and everything else. If the estate's total is under the thresholds (£325,000 nil-rate band, plus the £175,000 residence nil-rate band where it applies, and any transferred allowance from a late spouse), there is no tax to pay on the pension, though it still needs to be reported as part of the estate where an IHT account is required. Our guide to the UK inheritance tax threshold covers how those bands stack.

The reporting timeline, step by step

Here is the sequence as it will actually run for a death on or after 6 April 2027.

1. Death occurs and the PR identifies the pensions. Go through paperwork, bank statements showing contributions, and old employer records. The government's Pension Tracing Service can locate lost schemes. Early scheme notification matters more from 2027 than it ever has, because every deadline downstream hangs off it. Notifying schemes belongs in your first fortnight of tasks, alongside everything else in our first 30 days guide for executors.
2. The PR notifies each scheme of the death. This starts the scheme's four week clock. Ask in the same letter or call for everything you will need; our companion piece on what to request from pension providers after a death has a full checklist.
3. The scheme administrator responds within four weeks with the value of the unused funds and death benefits at the date of death, and flags any parts that are exempt, such as amounts passing to a spouse or civil partner, or death in service benefits which are outside the charge entirely.
4. The PR assembles the estate's IHT account. The pension values go in alongside all other assets. HMRC then calculates, in effect, how much of the estate's total IHT bill is attributable to the pension, because tax is apportioned across the estate's assets pro rata.
5. The tax attributable to the pension gets paid. There are two purpose-built routes. Beneficiaries can instruct the scheme to pay the IHT direct to HMRC through the new Pensions Direct Payment Scheme, modelled on the arrangement banks already operate for paying IHT before probate. Alternatively, or alongside, up to 50% of a beneficiary's entitlement can be withheld by the scheme for up to 15 months after the end of the month of death, so the money to pay the tax cannot vanish before the bill is settled.
6. The balance is released and the estate completes. Once the IHT position is settled, the scheme pays out remaining benefits and the PR carries on with the ordinary probate and estate administration process.

What if the scheme is slow?

The four week deadline exists because, under the old discretionary system, waiting months for pension information was common and mostly harmless for IHT purposes. From 2027 it is not harmless: the estate's IHT is normally due within six months of the end of the month of death before interest starts running, and you cannot finalise the account without the pension figures.

If a scheme blows past four weeks, chase in writing, cite the statutory information deadline, and keep copies. Document the delay, because HMRC has acknowledged in the consultation process that PRs should not be penalised for delays genuinely outside their control, and a paper trail showing you notified promptly and chased is your protection. The 15 month withholding window also gives practical breathing room: the tax funding mechanism does not collapse just because one scheme was slow in month two.

One further practical point: the four week duty is triggered by notification. A scheme that has not been told about the death owes you nothing. If you suspect there are pensions you have not found, treat tracing them as urgent rather than a loose end for later.

What this means for executors in practice

The honest summary is that being an executor gets more demanding for deaths from April 2027 where pensions are involved. You carry the legal responsibility for a tax on money you may never handle, held by institutions you do not control, under deadlines that interact awkwardly. The system's design does compensate: the four week valuation duty, the direct payment route and the withholding mechanism all exist to make the PR's job feasible. But the sequencing burden is yours.

Three habits will do most of the work. Notify every scheme in the first two weeks. Ask for the IHT valuation explicitly, in writing, so the four week clock is undeniable. And estimate the estate's likely position early, because an estate that is clearly under the thresholds needs a much lighter touch than one that is clearly over. The pensions IHT 2027 estimator is built for exactly that first sizing exercise, and our wider guides for executors and pension holders planning for 2027 cover the surrounding duties. For the executor's own reporting obligations in detail, see executor pension reporting duties from 2027.

Nothing here is financial or legal advice, and nothing in the 2027 rules requires anyone to move, withdraw or restructure a pension. If the estate you are handling looks likely to owe substantial tax on pension funds, or the scheme correspondence has become contentious, it is worth speaking to a specialist. We can connect you with vetted probate and estate professionals who deal with the inheritance tax side of estate administration every week, so you are not carrying personal liability for a system that is new to everyone.