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A person’s entitlement to a pension is not included in his estate on death, provided that the entitlement ends on death. In addition, investments held in a pension trust are not subject to inheritance tax relevant property charges. These reliefs, which are specific to registered pension schemes, are described in the Relief for pensions guidance note.

However, not all pension rights end on death, and even if no actual death benefits arise, certain other payments or receipts in connection with the deceased’s pension must be considered. The Administration of pension rights on death guidance note describes the death benefits or payments that may arise from different types of pension, and how to deal with them in the course of administering the estate. This guidance note categorises death benefits and payments according to their inheritance tax treatment. Where applicable, the compliance procedure is explained. The Income tax treatment of pensions on death guidance note provides the corresponding explanation for income tax.

The taxation of death benefits