Pensions will be included in the estate of someone who has died from April 2027 - and it will down to families to12:44, 02 Jun 2026Updated 12:47, 02 Jun 2026Grieving families will be responsible for taking "reasonable steps" to track down their loved ones pension funds for Inheritance Tax purposes from next spring.‌Pensions will be included in the estate of someone who has died from April 2027. Under current rules, if you die before the age of 75, the person inheriting your pension will not have to pay tax on your retirement savings.‌If you die after the age of 75, those who inherit your pension will pay Income Tax when they draw from it, as it will be treated as income.‌But from April 2027, inherited pensions will become subject to Inheritance Tax. The plans were first announced in the autumn 2024 Budget - but now, the Government has published a new technical note detailing the changes in more detail.It confirms that the personal representatives will be responsible for identify the deceased person's pensions. They must then report them and paying any Inheritance Tax due.‌However, families will be able to request that the pension provider pay any tax due directly to HMRC. Death in service payments will not be liable for Inheritance Tax under the changes.A further 5,000 estates became liable for Inheritance Tax during the last tax year. There were 32,000 estates that were subject to Inheritance Tax in 2025/26 - up by 5,000 since rates reached their current level in 2020/21.An HMRC spokesperson said: “We want to help people get their tax right and we’re continuing to provide information about how the taxation of unused pension funds and death benefit will work.‌“More than 90% of estates will continue to pay no Inheritance Tax. Some pension benefits – including payments to spouses and civil partners – are exempt from inheritance tax, so cannot be withheld.”It is important to remember that very few families end up having to pay Inheritance Tax due to several rules and allowances that are in place.Inheritance Tax applies to gifts transferred within seven years of death - so gifts that were given more than seven years ago are generally exempt.‌If there is Inheritance Tax to pay, the standard rate you pay is 40%. It is normally due on estates that are worth over £325,000 and you would pay 40% on the value above this amount.However, this threshold can often be much higher depending on who you leave your estate to. For example, there is no Inheritance Tax to pay when an estate is left to your spouse or civil partner.If you give away your home to your children - this includes adopted, foster or stepchildren - or grandchildren, then the Inheritance Tax threshold can increase to £500,000.Article continues belowThis includes the basic £325,000 allowance, plus an additional £175,000. If you are married or in a civil partnership, any Inheritance Tax allowance that isn’t used can be passed on when someone dies.This means a couple can potentially pass on as much as £1million without their estate being subject to Inheritance Tax. There are also ways to reduce how much Inheritance Tax is paid on your estate.Your rate of Inheritance Tax on some assets is reduced from 40% to 36% if you leave at least 10% of the net value after any deductions to a charity in your will.