Form IHT409 Pensions: How to Report Drawdown and Death Benefits (and the 2027 Change)
Form IHT409 is the schedule you send with IHT400 whenever the person who died had any pension other than the State Pension. It captures continuing pension payments owed at death, any lump sum or death benefit due, and any changes made to the pension within two years of death. Crucially, the way drawdown pots are treated is about to change: from 6 April 2027 most unused pension funds and death benefits fall inside the estate for Inheritance Tax, and the personal representatives — not the pension scheme — become responsible for reporting and paying that tax.
When you actually need IHT409
You complete IHT409 if the deceased "received, or had made arrangements to get, a pension other than the State Pension." It is one of the supplementary schedules to the full IHT400 account. If you are only completing IHT205/IHT207 or reporting an excepted estate, you usually will not touch this form — but most estates that need IHT400 and held any private, workplace or personal pension will need IHT409 too. (See the official form: Inheritance Tax: pensions (IHT409) on GOV.UK.)
The form does two jobs. First, it tells HMRC what the deceased was getting (or about to get) from their pension and how it was structured — guaranteed versus discretionary, in payment versus uncrystallised. Second, it flags anything that, under the current rules, could create an Inheritance Tax charge: a guaranteed payment that continues to a beneficiary, a death benefit the deceased could direct, or a transfer or contribution made when the person was already in ill health.
Since a September 2022 redesign, the words "lump sum" were changed to "death benefit" throughout IHT409, and the old questions 25 to 42 were removed. If you are looking at an older copy of the form, the box numbering will differ. Always download the current version from GOV.UK before you start.
Which boxes cover what
HMRC's own caseworker manual groups the form into three blocks, which is the cleanest way to understand it. The exact wording shifts slightly between form editions, so always read the box on the live form, but the structure is stable:
| Block (HMRC manual ref) | What it captures | Why it matters |
|---|---|---|
| Boxes 1–7 (IHTM17013) | Continuing pension payments — whether any pension or annuity instalments carried on being paid after death, and whether those payments were guaranteed or paid at the trustees' discretion. | A guaranteed continuing payment can form part of the estate; a genuinely discretionary one usually does not. HMRC may refer guaranteed payments to its Actuarial Team for valuation. |
| Boxes 8–16 (IHTM17014) | Lump sums and death benefits — any death benefit payable from the scheme, who received it, and whether the deceased had power to nominate or direct where it went. | Where the deceased could direct the benefit (or it was paid to the estate), it may be taxable now. Where trustees had genuine discretion, it currently usually falls outside the estate. |
| Boxes 17–24 (IHTM17015) | Changes, transfers, disposals and contributions in the two years before death — including pension transfers and benefit alterations. Box 21 asks you to give details of the transfer or changes on page 16 of IHT400. | HMRC looks here for value shifted out of the estate while in ill health. A transfer or contribution made when the person knew they were seriously ill can be challenged as a chargeable transfer. |
So to map it to your task: continuing pension payments live in the first block (boxes 1–7), lump sums and death benefits in the middle block (boxes 8–16), and alterations, transfers and contributions within two years of death in the final block (boxes 17–24, with box 21 cross-referencing page 16 of IHT400).
Worked example: a £180,000 drawdown pot under the current rules
The estate of Margaret Whitfield, who died in March 2026 aged 71.
Margaret had a defined-contribution personal pension in flexi-access drawdown. At the date of death the uncrystallised/undrawn fund was worth £180,000. The scheme was a normal discretionary arrangement: the trustees, not Margaret, had the final say over who received the death benefit, and Margaret had completed an expression-of-wish form naming her son Tom. She was not receiving any guaranteed annuity, and she had made no transfers or unusual contributions in the two years before she died.
Step 1 — Is the pot in the estate? Under the rules in force for a death in March 2026, a discretionary death benefit like this is generally outside the estate for Inheritance Tax. The trustees' discretion is what keeps it out. So the £180,000 does not get added to Margaret's taxable estate.
Step 2 — What goes on IHT409? You still complete the form to disclose the pension. In the death-benefit block (boxes 8–16) you record the £180,000 death benefit, who it was paid to (Tom), and that it was paid at the trustees' discretion. The boxes 1–7 block records that there were no guaranteed continuing payments, and boxes 17–24 record that there were no transfers or alterations in the last two years.
Step 3 — What flows to IHT400 box 56? Box 56 on page 6 of IHT400 captures money that was actually due to the deceased from a pension — for example a lump sum already crystallised and owed at death, or arrears of pension up to the date of death. Margaret's discretionary death benefit is not "due to her", so nothing from this pension lands in box 56. The pot is reported on IHT409 for transparency but adds £0 to the IHT total.
Step 4 — Income tax on Tom. Inheritance Tax and income tax are separate questions. Because Margaret died before age 75, Tom can normally take the inherited drawdown free of income tax. (Had she died after 75, Tom would pay income tax at his marginal rate on what he draws — but that still has nothing to do with IHT409.)
Result under current rules: £180,000 passes to Tom, £0 added to the IHT estate, £0 IHT on the pension, and (death before 75) £0 income tax. The form is completed purely as a disclosure.
That zero-IHT outcome is exactly what is changing. Run the same facts forward to a death on or after 6 April 2027 and the £180,000 is expected to be drawn into Margaret's estate — the analysis below shows what that does.
What changes from 6 April 2027
From 6 April 2027, the government is bringing most unused pension funds and death benefits into the value of the estate for Inheritance Tax purposes. This removes the long-standing advantage that let undrawn defined-contribution pots pass outside the estate. The change was confirmed in the government's summary of responses on Inheritance Tax on pensions (liability, reporting and payment) and the related technical note.
What is in — and what is carved out
- In scope: most unused (undrawn) pension funds and lump-sum death benefits, including discretionary drawdown pots that currently fall outside the estate.
- Excluded: all death-in-service benefits payable from a registered pension scheme are excluded from the estate for IHT — that is a deliberate carve-out.
- Existing exemptions kept: the spouse/civil partner exemption and the charity exemption continue to apply, so a pension death benefit passing to a surviving spouse or civil partner, or to a registered charity, remains exempt.
Why the personal representatives become liable
Under the new model, the personal representatives (the executors or administrators of the estate) — not the pension scheme administrators — are responsible for reporting and paying the Inheritance Tax on pensions from 6 April 2027. The government's response states that "personal representatives will be liable to report and pay Inheritance Tax on pensions from 6 April 2027," aligning pensions with the way the rest of the estate is already handled.
This is a meaningful shift in practice. Today the PRs can largely ignore a discretionary death benefit because it sits outside their account. From April 2027, they must value it, fold it into the IHT400 estate total, and find the cash to pay the tax — even though the money may have been paid directly to a beneficiary rather than into the estate. Co-ordinating with the pension scheme to recover the tax (or to have the scheme pay it) becomes part of the job.
The same £180,000 pot, but Margaret dies in May 2027.
Assume the same facts: an undrawn £180,000 drawdown pot, son Tom as the nominated beneficiary, and a non-pension estate (house and savings) of £400,000. Margaret is a widow who inherited her late husband's full nil-rate band, so her estate has a £325,000 nil-rate band plus a transferred £325,000, and she qualifies for the £175,000 residence nil-rate band (plus a transferred £175,000) because she leaves her home to Tom. (Thresholds confirmed on GOV.UK; both are frozen to 5 April 2031.)
Step 1 — Build the estate. Non-pension estate £400,000 + pension now in scope £180,000 = £580,000 taxable estate.
Step 2 — Apply the allowances. Available bands: £325,000 + £325,000 (transferred NRB) = £650,000 nil-rate band, plus £175,000 + £175,000 (transferred RNRB) = £350,000. Total tax-free band £1,000,000. Because £580,000 is below £1,000,000, the IHT due is £0. The pension is now counted, but the doubled-up allowances still absorb it.
Step 3 — Now remove the spouse uplift. Suppose instead Margaret had never married, so she has only her own £325,000 NRB and £175,000 RNRB = £500,000. Estate of £580,000 minus £500,000 = £80,000 taxable at 40% = £32,000 of Inheritance Tax. Under the pre-2027 rules this estate paid nothing on the pension; from April 2027 the same facts produce a £32,000 bill purely because the £180,000 pot is now counted.
Step 4 — Who pays and from where. The personal representatives report the £180,000 within the IHT400 estate total and are liable for the £32,000. They will typically need the pension scheme to pay its share of the tax attributable to the pot before releasing the benefit to Tom, so the IHT does not fall entirely on the rest of the estate.
| Question | Death in March 2026 (current) | Death in May 2027 (new rules) |
|---|---|---|
| £180,000 drawdown pot in the estate? | No — discretionary benefit outside the estate | Yes — counted as part of the estate |
| Reported on IHT409? | Yes (disclosure) | Yes (and feeds the IHT total) |
| Who pays any IHT on the pension? | N/A — no IHT arises | Personal representatives (recovering the share from the scheme) |
| Income tax on the beneficiary? | Nil if death before 75 | Unchanged — still depends on age at death (separate from IHT) |
How IHT409 interacts with the IHT400 estate total
IHT409 is a schedule — it does not produce a single number that you simply copy into the IHT400 summary. Instead, the relevant figures feed into the estate in two ways:
- Money due to the deceased (a crystallised lump sum owed at death, or pension arrears) goes into box 56 on page 6 of IHT400, the "Pensions" asset line.
- Changes in the two years before death flagged in boxes 17–24 (box 21) are described on page 16 of IHT400, where HMRC assesses whether a chargeable transfer arose.
- Under the current rules, a genuinely discretionary death benefit is disclosed on IHT409 but adds nothing to the IHT400 totals.
From 6 April 2027, that last bullet is where the weight shifts: pension funds that today sit on IHT409 as disclosure-only will need to be valued and folded into the estate total that drives the tax calculation. HMRC has indicated the reporting mechanics will be updated for the new regime, so check the latest version of IHT400 and IHT409 for any death on or after that date.
- Complete IHT409 with IHT400 whenever the deceased had any pension other than the State Pension.
- Boxes 1–7 = continuing payments; boxes 8–16 = lump sums/death benefits; boxes 17–24 = changes, transfers and contributions within two years of death (box 21 references page 16 of IHT400).
- Under current rules, a discretionary drawdown death benefit (like the £180,000 example) is disclosed on IHT409 but adds nothing to the estate — and is income-tax-free to the beneficiary if death is before age 75.
- From 6 April 2027, most unused pension funds and death benefits fall inside the estate for IHT; death-in-service benefits are excluded and spouse/charity exemptions remain.
- From 6 April 2027 the personal representatives — not the scheme administrators — report and pay the IHT on pensions, usually recovering the pension's share from the scheme.
- "Money due to the deceased" feeds IHT400 box 56; the rest is disclosure today but will drive the estate total under the new rules.
Frequently asked questions
Do I still complete IHT409 if no Inheritance Tax is due on the pension?
Yes. IHT409 is a disclosure schedule, not just a tax calculation. Even where a discretionary death benefit falls outside the estate and creates no IHT, you complete the form to tell HMRC what the deceased held and how it was structured. Leaving it blank when a pension existed can hold up the IHT400.
Which IHT409 boxes cover a pension transfer made shortly before death?
The boxes 17–24 block covers changes, transfers, disposals and contributions made in the two years before death, and box 21 asks you to give the details on page 16 of IHT400. HMRC looks here for value moved while the person was in ill health, which can be treated as a chargeable transfer.
Is a £180,000 drawdown pot taxed for IHT right now?
Under the rules in force for a death in 2026, an undrawn discretionary drawdown pot generally passes outside the estate, so no Inheritance Tax arises on it — you still disclose it on IHT409. From 6 April 2027 the same pot is expected to be counted within the estate, which can create an IHT charge depending on the available nil-rate bands.
Who pays the Inheritance Tax on pensions from April 2027?
The personal representatives (executors or administrators) become liable to report and pay the IHT on pensions from 6 April 2027 — not the pension scheme administrators. In practice they value the pension within the estate and arrange to recover the pension's share of the tax from the scheme.
Are death-in-service benefits caught by the 2027 change?
No. The government confirmed that all death-in-service benefits payable from a registered pension scheme are excluded from the value of the estate for Inheritance Tax purposes, even under the new regime.
Does the 2027 change affect income tax on inherited pensions?
No — it is an Inheritance Tax change. Income tax on an inherited pension still depends mainly on the age of the member at death (broadly tax-free to the beneficiary if death is before 75, taxable at the beneficiary's marginal rate if after 75). The two taxes are assessed separately.
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Sources: IHT409 (GOV.UK), HMRC Inheritance Tax Manual IHTM17013 / IHTM17014 / IHTM17015 / IHTM10063 (IHT400 box 56), IHT on pensions: summary of responses, IHT on pensions: technical note, and IHT thresholds and rates (GOV.UK).