When a client dies, I am often the first professional the family rings. Not the solicitor, not the financial adviser. Me, because my number is in the phone and I am the one who has been in the numbers every quarter.
The first questions are always about the company. Who signs now, what happens to the payroll, is there any cash in there. From 6 April 2027 there is a harder question sitting behind those, and on 27 August HMRC published the paperwork that makes it real.
TL;DR: From 6 April 2027 unused pension funds sit inside the estate for inheritance tax. HMRC's second technical note puts the tracing job on personal representatives, attaches personal liability to it, and gives them no register to search. The fix is a pension schedule written now, while the client is alive.
What Did HMRC Actually Publish on 27 August?
The machinery, not the policy. The policy already landed: from 6 April 2027 most unused pension funds and death benefits count towards the value of the estate for inheritance tax (HMRC, 2026). I covered what that change does to a business owner's estate in the April 2027 pensions and IHT explainer.
Technical Note 2 sets out how information moves between scheme administrators, personal representatives and beneficiaries after a death. A scheme has 28 days from receiving a request to hand over the basic information, with a further 14 days where beneficiaries have not yet been identified (HMRC Technical Note 2, 2026).
The scale is already published. Of roughly 213,000 estates with inheritable pension wealth in 2027-28, HMRC expects 10,500 to owe inheritance tax that would previously have owed none, and around 38,500 to pay more, with the average bill in that group rising by about £34,000 on an existing average liability of £169,000.
Why Is Finding the Pensions the Hardest Part?
Because nobody has a list. Personal representatives are expected to identify every pension the deceased held, and there is no searchable register of private UK pensions to do it with.
The gap is documented. The Pensions Policy Institute counted around 3.3 million lost or forgotten pension pots worth £31bn, averaging £9,470 each, with the total value up 60% since 2018 (Pensions Policy Institute research, 2024). A pot that went missing while the member was alive does not get easier to find afterwards.
The pensions dashboard was meant to close this. Schemes must be connected by 31 October 2026, but no public launch date is fixed, and the Secretary of State has only promised at least six months' notice before the MoneyHelper dashboard opens (Pensions Dashboards Programme, 2026). Even once it opens, a dashboard is built around a living person proving their own identity. There is no executor login.
What Happens if Your Executor Misses the Inheritance Tax Deadline?
They can end up paying for it personally. Inheritance tax falls due six months after the end of the month of death and interest runs from that point, so someone who dies in April 2027 has tax due by 31 October 2027. That is well before probate is granted on anything complicated.
Probate timing does not rescue the position. HMCTS was averaging 4.3 weeks on digital applications and around 16 weeks on paper as at June 2026 (ICAEW, 2026), and a stopped application adds weeks on top.
Meanwhile the withholding notice, the one tool that keeps money in the scheme, holds back at most 50% of a beneficiary's entitlement and lapses 15 months after the end of the month of death. Beneficiaries are jointly and severally liable alongside the personal representative for tax on benefits they have received. If the money has gone to a beneficiary who has spent it, HMRC can still come to the personal representative. Clearance, which closes the matter off, cannot be applied for until 12 months have passed since the death and three months since the probate code was issued.
The One Genuinely Useful Thing in the Note
A prospective personal representative can act before the grant. Someone named as executor who reasonably expects to take the role can request scheme information and issue withholding notices before probate. Payment notices are different, and those need the grant.
That matters more than it reads. It turns the first weeks after a death into working time, and those are the weeks when a beneficiary is most likely to ring the scheme and ask for their money.
Liability is clearer now too. A scheme administrator who ignores a valid withholding notice becomes jointly liable for the tax attributable to those benefits. So the notice carries weight even when the family has none of its own.
What I Am Putting in Client Files Now
A pension schedule, sitting next to the will, written while the client is alive. Scheme name, provider, policy or membership number, administrator contact, approximate value, and the date of the last nomination form. Twenty minutes for a client with their online accounts open, months for an executor starting from nothing.
I am doing director clients first, for a dull reason. I already know about the pensions I claimed corporation tax relief on, because employer contributions run through the accounts and the payroll journals. Same instinct as capping my client list: if I hold the records, I should be able to produce them. What I cannot see are the old auto-enrolment pots from jobs the client had before going out on their own, and those are the ones that go missing.
Two additions worth making. Check the nomination form still reflects reality, because a form completed in 2011 naming a former spouse gets acted on regardless. And flag anything that is death in service from a registered scheme, since those stay outside inheritance tax from 6 April 2027 whether the scheme is discretionary or not, as do benefits passing to a spouse, civil partner or charity.
Why Did HMRC Make Your Pension Provider the Enforcer?
Because the provider can see the money leaving and HMRC cannot. Making a scheme administrator jointly liable when it ignores a valid notice turns a private intermediary into a collection agent.
That is a principal-agent fix, meaning the party who wants something done but cannot watch the transaction transfers the risk to the party who can. It is efficient for HMRC and cheap, because the compliance cost lands on the scheme and the family rather than the Exchequer. It is also why I expect little flexibility in practice. An administrator facing personal exposure follows the notice to the letter, in the same way the salary sacrifice cap removed judgement from payroll decisions that used to involve some.
Frequently Asked Questions
What is a withholding notice on a pension, and who can issue one?
It is a written instruction telling a pension scheme to hold back up to 50% of a beneficiary's entitlement until the inheritance tax position is settled. Personal representatives can issue one, and so can a prospective personal representative before probate is granted. It ends when it is withdrawn, when the tax and interest are paid, or 15 months after the end of the month of death, whichever comes first.
Can my executor deal with my pensions before probate is granted?
Partly. A prospective personal representative can request scheme information and issue withholding notices ahead of the grant. They cannot issue a pensions direct payment scheme notice, which is the instruction that makes the scheme pay HMRC directly. That needs the grant, and it is only available where the tax and interest come to at least £1,000.
Who actually pays the inheritance tax on a pension, the estate or the person who inherits it?
Both can be pursued. The personal representative is responsible for reporting and paying, but anyone receiving benefits derived from the pension is jointly liable alongside them for the tax attributable to those benefits. A scheme administrator that ignores a valid notice can be brought in as well.
Are all pensions caught from April 2027?
No. Death in service benefits payable from a registered pension scheme are out of scope, as are dependants' scheme pensions from defined benefit or collective money purchase arrangements. The existing exemptions for a surviving spouse or civil partner and for registered charities carry on unchanged.
What should actually go on the pension schedule?
Scheme name, provider, policy or membership number, administrator address, approximate current value, and the date of the last nomination form. Add the employer where it was a workplace scheme, because that is how an executor traces a pot when the provider has since merged. Review it whenever the client changes jobs or updates the will. It belongs in the same file as the things I check when taking over from another accountant.
If your pension is the largest thing you own outside the company, the schedule is a twenty-minute job that saves your executor months of letter-writing. Get in touch and I will send you the template I use, or fill it in with you from the company records I already hold.