HMRC has published the second note on inheritance tax and pensions, and this is the one that gets into the details. Where note 1 set out the principles of what’s changing, this one sets out:

• Who has to tell who what

• When it needs to be done by

We’re breaking down what technical note 2 means for firms dealing with estate planning or probate cases, and what advisers need to do next. Let’s go.

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People involved

Before we get into the detail, let’s quickly summarise the people involved

Personal Representative (PR): This is the executor of the estate (if appointed by a Will) or the administrator (if appointed by the court).

Administrators: The administrator of the pension scheme so essentially the team dealing with the distributing of pension assets on death

Beneficiary: The person(s) due to receive the proceeds of an unused pension. This may be a nominated beneficiary or a dependent.

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There are five information stages

When a client dies, personal representatives and pension administrators will need to exchange information at up to five points:

1. PR provides a notification of death; the administrators provide the PR information such as the value of the pension.  

2. If an IHT account needs to be filled, the PR may need information from the administrators on who the beneficiaries of the pension are.

3. A withholding notice, if the PR wants up to 50% of a beneficiary's entitlement held back.

4. A payment notice, if the PR wants IHT to be paid straight from the pension.

5. Confirmation by the administrators (to the PR) of lump sum and death benefit allowance usage.

Not every case goes through all five. For example, a straightforward estate might only need stage one.

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Deadlines are now baked in

We recommend flagging this with clients and your own firm’s admin team.  

Pension schemes will have statutory deadlines to work to. Examples include:

• 28 days to provide basic information about the pension value

• 14 days to confirm details once beneficiaries are decided

• 14 days to validate (or reject) a withholding notice

• 35 days to act on a valid payment notice

These are legal deadlines and advisers shouldn’t assume schemes will move at the same pace they always have. You may find some schemes are able to work quicker while some have to use the full limit.

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Who counts as a "personal representative" is broad

Technical note 2 pays extra attention to this.

Where there is no will, or the named executor cannot or will not act, someone can step in as a "prospective personal representative" and still request information and issue withholding notices, provided they can show they have reason to believe they will end up administering the estate.  

This is helpful to know if you have clients without a will, or with potentially complicated family circumstances.

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Withholding and payment notices

• A withholding notice lets a PR ask a scheme to hold back up to 50% of a beneficiary's pension entitlement, for up to 15 months, while IHT is sorted out.

• A payment notice lets IHT be paid directly from the pension to HMRC, rather than the beneficiary having to fund it and wait for a refund.

Both come with their own forms and conditions. It’s worth noting that draft templates are included at the end of the note, which you can find here.  

There are consequences for getting either wrong, including scheme administrators becoming jointly liable for unpaid tax.

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What's coming next?

A third note is coming!

HMRC has confirmed a third technical note will land in autumn 2026, covering international cases, how IHT interacts with income tax, and more on trusts and charities.  

Draft guidance will come out over autumn and winter, with final guidance expected in spring 2027.

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What should advisers be doing now?

It’s a good idea to take some practical steps now.  

The information requirements take effect from day one of a death occurring after the rules change, so the prep needs to happen well before that.

We do recommend reading the note yourself, but here’s what advice firms can do now:

• Understand the information process. Look back over the five stages and ensure you understand who needs what and when. You may need to support clients who act as PRs.

• Ensure clients have a Will. We know that this is something advisers are constantly reminding clients about but the potential need for a ‘prospective personal representative’ instead of an executor makes things worse at an already stressful time.

• Audit client pension arrangements. Flag anyone where pensions form a meaningful part of the estate, particularly clients without a will, blended families, or anyone relying on an expression of wishes that has not been reviewed in years.

• Review probate processes. If your firm handles probate or acts as executor, check your process can cope with the new evidence and identity requirements set out in Annex A, and the tighter deadlines schemes will be working to.

• Revisit expressions of wishes and nominations. Given the new withholding and payment mechanics, out of date nominations could cause friction for beneficiaries in the future.

• Get ahead of client conversations. Clients are going to have questions, and advisers should be able to speak to it confidently.

If you aren’t sure how exposed your client bank is or want help working through what this all means for your advice process, get in touch today.  

We love to chat, and our compliance team is always on hand to make sense of change before it becomes urgent.