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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Pensions: IHT charges: other payments

Where a pension or annuity ceases on death, the only pension benefits that are part of the estate are any arrears of pension due at the date of death. These are a debt due to the estate in the normal way.

Refunds of the member’s contributions are assets of the estate as the scheme member is the only person entitled to these payments.

Any pension payments made after death because the pension scheme provider was not aware of the death are not part of the estate. These payments are repayable to the provider although small overpayments may occasionally be written off.

Ex-gratia payments made by a pension scheme provider are not taxable as they are not paid under any legal obligation and the beneficiary has no entitlement to a payment