Policy paper

National Savings and Investments tracing Issue

Published 28 October 2026

Who is likely to be affected 

Individuals and estates eligible for payments under the National Savings and Investments (NS&I) remediation scheme established under the National Savings (Remediation Scheme Regulations 2026). This includes personal representatives administering the estates of deceased NS&I customers whose accounts were affected by historic failures in NS&I’s tracing processes. 

General description of the measure 

NS&I identified historic failures in its tracing processes which resulted in some savings accounts not being traced and paid to the estates of deceased customers. As part of its remediation scheme, NS&I is reuniting affected estates with the full value of holdings that should have been returned to them earlier. To make sure estates have not been disadvantaged by the delay, this amount will be adjusted upwards to include the higher of the interest accrued since the error occurred or the Bank of England base rate plus one percentage point. Appropriate compensation may also be paid.

This measure provides a regulation-making power to enable the Treasury to provide tax reliefs and administrative easements in connection with holdings and payments affected by historic failures in NS&I’s tracing processes relating to bereavement claims. 

As announced by the Government on 19 May 2026, the intended tax treatment includes a full inheritance tax exemption for holdings of the remediation population affected by the tracing error and an income tax easement for personal representatives in respect of interest accrued before death or during the administration period. The detailed reliefs will be delivered through secondary legislation.

Policy objective 

The policy objective is to prevent those affected by the historic NS&I tracing failures from facing disproportionate disruption, administrative burdens or costs arising from the tax consequences of rectifying those failures. 

The regulation-making power will enable detailed tax reliefs and associated administrative easements to be provided through secondary legislation, including to give effect to the inheritance tax and income tax treatment announced on 19 May 2026.

Background to the measure 

In December 2025, NS&I informed HM Treasury of failures in its tracing processes which meant that the estates of deceased customers had not been reunited with savings held by NS&I. NS&I subsequently established a remediation scheme to reunite affected estates with their savings and make associated payments.

Ministers subsequently announced on 19 May 2026 that legislation would be introduced to prevent affected estates, personal representatives and beneficiaries from facing disproportionate administrative burdens or costs arising from the tax consequences of rectifying the historic tracing failures.

The announcement confirmed that a full inheritance tax exemption would be introduced for holdings of the remediation population affected by the tracing error. It also confirmed that personal representatives would not be liable for income tax ordinarily due in that capacity on interest accrued before death or during the administration period.

Detailed proposal 

Operative date 

The regulation-making power will have effect from Royal Assent to the Finance Act 2027.

Regulations made under the power may have retrospective effect, provided that they do not increase a person’s liability to tax.

Current law

For Inheritance Tax purposes, all assets that a person was entitled to immediately before their death are generally taken into account when calculating the value of their estate. 

Where assets are discovered after an estate has been administered, personal representatives may need to reopen the estate, update Inheritance Tax information previously provided to HMRC and, where appropriate, pay additional Inheritance Tax and associated interest. This can happen even where the assets were not known about when the estate was originally administered. 

Depending on the product concerned, interest arising on NS&I holdings may be subject to Income Tax.

Where interest relating to a deceased customer’s account is identified through the remediation process, personal representatives may be required under existing rules to report and account for Income Tax in respect of that interest before it is distributed to the person or persons ultimately entitled to it. In some cases, this may arise long after the assets should originally have been identified and distributed. 

Growth in NS&I holdings is not generally subject to Capital Gains Tax, but some types of compensation payments may be chargeable. 

The National Savings Remediation Scheme Regulations 2026 established a scheme under which NS&I may make payments to affected estates, and, in addition, NS&I have committed to returning the value of previously untraced holdings. These payments can include accrued interest and certain compensation payments. The regulations do not provide specific tax exemptions for these amounts. 

Proposed revisions 

The measure will provide the Treasury with a power to make regulations providing relief from Income Tax, Capital Gains Tax and Inheritance Tax, and from associated information and reporting requirements, in connection with qualifying NS&I holdings and payments arising from the NS&I remediation schemes. 

The power will enable the detailed reliefs to give effect to the intended tax treatment announced on 19 May 2026, including the intended inheritance tax and income tax easements. 

Regulations may make different provision for different cases and may have retrospective effect, provided that they do not increase a person’s liability to tax.

Summary of impacts 

Exchequer impact (£million) 

2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031	2031 to 2032
—	nil	nil	nil	nil	nil

This measure is not expected to have an Exchequer impact. 

Economic impact 

This measure is not expected to have any significant macroeconomic impacts. 

Impact on individuals, households and families 

This measure will affect individuals and estates of deceased customers eligible for payments under the NS&I remediation scheme. 

The intended reliefs are designed to reduce administrative burdens for personal representatives who would otherwise be required to revisit historic estate administration and tax reporting obligations, including for Income Tax. The detailed tax treatment will be set out in regulations made under the power. 

The measure is not expected to impact family formation, stability or breakdown. 

This measure is expected overall to impact individuals’ experience of dealing with HMRC for affected estates by enabling tax and administrative easements to be provided through secondary legislation.

Equalities impact 

This measure may apply to individuals regardless of their protected characteristics. HMRC does not hold data that it can use to assess whether there are any disproportionate impacts to protected groups. 

Administrative impact on business including civil society organisations 

This measure is expected to have no impact on businesses or civil society organisations because the intended reliefs apply to individuals and estates eligible for payments under the NS&I remediation scheme. 

Operational impact (£ million) (HMRC or other) 

HMRC will incur some operational and delivery costs associated with implementing the measure, including any necessary changes to guidance, processes and systems. 

The expected costs are not anticipated to be significant and will be managed within existing programme governance arrangements. 

Other impacts 

The measure has been assessed in accordance with the government’s tax impact assessment framework. No other significant impacts have been identified. 

Monitoring and evaluation 

Consideration will be given to monitoring this measure through information collected from NS&I regarding operation of the remediation scheme. This will be kept under review through work with NS&I and HM Treasury to assess whether the measure is operating as intended and to identify any issues requiring further consideration. 

The measure will be kept under review through regular communication with affected customer groups. 

Further advice 

If you have any questions about this change, contact Inheritance Tax: general enquiries.