Two clocks, and only one runs to April 2027
Pension money in a British scheme enters the inheritance tax estate on 6 April 2027, and the date sits in the statute rather than in a Budget speech. Section 71 of the Finance Act 2026 is one sentence: sections 66 to 70 "apply in relation to deaths, and (so far as relevant) to other transfers of value within the meaning of IHTA 1984, occurring on or after 6 April 2027."
With just over six months to go, the charge is written and the machinery is not. HMRC's Technical Note 2, published on 27 August 2026, opens by stating it "is not draft guidance", then lists what is still to come: a third technical note this autumn, draft guidance over the winter, final guidance in spring 2027.
The other half of the reform is already running. The reliefs changed on 6 April 2026 — five months ago, not next year — and that is where a family with land, a trading company or unlisted shares meets the arithmetic first.
What section 150A catches
Section 66 inserts a new section 150A into the Inheritance Tax Act 1984. A member of a registered pension scheme — or of a qualifying non-UK scheme, or a section 615(3) scheme — is treated as beneficially entitled immediately before death to "notional pension property": the money purchase pots that may provide benefits on death, plus defined benefit lump sums and scheme continuation payments.
Excluded benefits come out first, and they are defined narrowly: a dependants' scheme pension, a dependants' or nominees' annuity bought with the member's own lifetime annuity, and a benefit payable only because the member was in a particular employment at death. Death in service benefits from registered schemes are out of scope altogether, discretionary or not; the government accepted the point in its response of 21 July 2025.
Section 150A(5) treats notional pension property as situated where the scheme is established. For a non-UK scheme that puts the property outside the UK, which helps only if the member is outside the residence test that now governs excluded property — different tax, different arithmetic. Moving the scheme moves the situs, and nothing else about the charge.
Who pays, and what a scheme can be told to do
Personal representatives report and pay. The consultation had proposed the reverse — scheme administrators liable — and the response published on 21 July 2025 records the reversal. Administrators, respondents warned, would pay 40% on account to stop interest running from the six-month deadline. Beneficiaries become jointly and severally liable for the tax on what they are entitled to once appointed; a personal representative's liability is limited to assets passing directly through the estate. The six-month deadline is unchanged.
Administrators are not out of it. Sections 226A and 226B, inserted by section 68, hand the estate two instruments. A withholding notice stops the scheme paying a beneficiary beyond 50% of their benefit entitlement and lapses at the latest 15 months after the end of the month in which the deceased died. A payment notice obliges the administrator to pay tax within 35 days and cannot be for less than £1,000. An administrator that pays in breach of a withholding notice, or fails to pay under a payment notice, carries liability under the new section 210(3)(b).
The allowance is £2.5 million, and an old HMRC page still says £1 million
The 100% relief allowance for agricultural and business property is £2.5 million. Paragraph 4 of Schedule 12 to the Finance Act 2026 inserts section 124D into the 1984 Act, and section 124D(2)(a) says £2.5 million. HMRC's current policy paper records that the figure "would be increased from £1 million to £2.5 million", announced on 23 December 2025.
The older of HMRC's two policy papers on this reform, still posted, still describes a £1 million allowance and a couple passing on "up to £3 million". Anyone working from a 2025 briefing note or the Budget coverage is working from a figure the statute no longer contains. Where a summary and the Act disagree, the summary is wrong.
Above the allowance, relief is 50%: sections 104 and 116 of the 1984 Act now reduce value by 50% as the default, with the allowance restoring 100% up to the cap. The allowance transfers to a surviving spouse or civil partner, and paragraph 16 of Schedule 12 assumes a full unused allowance where the first death came before 6 April 2026. HMRC's arithmetic puts a couple at up to £5 million of qualifying assets, or £5.65 million once the nil-rate bands are counted.
What already changed on 6 April 2026
Paragraph 17(1) of Schedule 12 to the Finance Act 2026 gives the operative date: the amendments have effect for transfers of value made, and occasions on which tax is chargeable under Chapter 3 of Part 3 of the 1984 Act, on or after 6 April 2026.
The loudest change is to shares. Those admitted to trading on a recognised stock exchange and designated "not listed", and qualifying shares on foreign exchanges that are not recognised exchanges, now get 50% relief in all circumstances: paragraph 12 writes them into section 105 but outside the 100% allowance. HMRC expects around 1,000 of the 1,500 business-property-only estates paying more in 2026-27 to hold only such shares. Instalment payment is extended to all shares qualifying for business property relief.
Trusts have their own £2.5 million allowance. Schedule 12's second part reaches the other way: from 6 April 2026, Schedule A1 to the 1984 Act — which already denies excluded-property status to overseas property attributable to UK residential property — extends to UK agricultural property. Farmland held through an offshore company stops being outside the charge.
The count, and the rule that reaches back to 2024
HMRC estimates that around 213,000 estates a year will hold inheritable pension wealth in 2027-28; that about 38,500 will pay more inheritance tax than they otherwise would; and that roughly 10,500, some 1.5% of UK deaths, will become liable where they were not. More than three quarters of those 213,000 are expected to have no liability at all. The document calls the figures an upper limit, because they assume nobody changes behaviour; the consultation drew 649 written responses.
Paragraph 17 also carries an anti-forestalling rule. Where a potentially exempt or chargeable transfer was made after 29 October 2024 but before 6 April 2026, and the transferor dies on or after 6 April 2026 within seven years of it, the relief amendments are treated as having had effect when the transfer was made. A gift made in 2025 and taxed on the old basis is recalculated on the new one.
Nothing indexes for five years. Section 124L links the allowance amounts to the consumer prices index, but comes into force on 6 April 2030, and no amount may rise before 6 April 2031, after which the Treasury must order an increase every 6 April. The rate bands are frozen alongside: the Finance Act 2025 extended the freeze to 2028-29 and 2029-30, and section 72 of the Finance Act 2026 pushed it to 2030-31.
The 2025 Act moved the other way once: section 61 extended agricultural property relief to land under an environmental management agreement, for transfers of value on or after 6 April 2025. The two Acts received Royal Assent on 20 March 2025 and 18 March 2026.
Not settled yet
Not settled: almost everything about how the pension process will work. The information regulations, SI 2026/818, were laid on 15 July 2026 and already differ from the draft; basic information a personal representative requests must come within 28 days, and each beneficiary's share within 14 days of the beneficiaries being determined. The excepted estates regulations have not been amended, so which pension-bearing estates escape an account altogether is, today, an open question. Technical Note 2 says those amendments come "ahead of 6 April 2027".
A family with a UK pension and a non-UK life therefore has six months and a reading list. The statutes are readable now, and they say one clean thing the coverage does not: the allowance is £2.5 million, and the relief cut that pays for the pensions reform happened already. The guidance arrives in the spring: comfortable if the death is in the summer, thin if it is not.
