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Hargreaves Lansdown (HL) is one of the largest UK investment platforms and a widely held provider of SIPPs (Self-Invested Personal Pensions). When an HL SIPP holder dies, the fund value can be passed to a nominated beneficiary in a tax-efficient way. SIPP funds fall outside the estate and do not normally require probate — but there are important choices to make.
In most cases, no. A SIPP death benefit is not paid under the will and is not released by a grant: Hargreaves Lansdown decides who receives the fund, using the discretion the scheme rules give it, and pays that person directly. That discretion is why the fund sits outside the deceased's estate rather than in it.
If there is no nomination and HL cannot identify a suitable beneficiary, the SIPP may be paid to the estate. In that case, probate may be required before the funds are distributed.
The death benefit is the full value of the SIPP fund at the date of death — including all investments (shares, funds, cash, bonds) held within the SIPP wrapper. HL offers beneficiaries two main options:
The beneficiary can take the full fund value as a cash lump sum. If the SIPP holder died before age 75, this is normally free of income tax up to the lump sum and death benefit allowance, provided it is paid within two years of HL being told of the death. If the holder was 75 or over, the lump sum is subject to income tax at the recipient's marginal rate.
Alternatively, the beneficiary can transfer the SIPP into an inherited drawdown plan held with HL. This means the fund stays invested and the beneficiary can draw income from it flexibly over time. This is often more tax-efficient — particularly for inherited pots where the holder died before age 75, as withdrawals remain tax-free.
HL will present both options clearly when the beneficiary contacts them. The choice can have a significant impact on the long-term tax treatment, so some beneficiaries seek independent financial advice.
HL SIPP holders can register an expression of wishes (nomination of beneficiary) through their online HL account at any time. This tells HL who the holder would like to receive the fund.
It is not an instruction HL must follow: HL considers the nomination and then decides. That discretion is what has kept the fund outside the estate for inheritance tax purposes up to April 2027. In practice, HL almost always follows a valid expression of wishes. Multiple beneficiaries and percentage splits can be nominated.
HL SIPP holders should review their expression of wishes regularly — it is quick to do online and can save significant complication for bereaved families. Outdated nominations naming a former partner or deceased person are a common cause of delay and distress.
This is why the age-75 rule is so important for SIPP planning. See GOV.UK for the latest guidance on pension death benefit taxation.
Currently, HL SIPP funds fall completely outside the estate and are not liable to inheritance tax. This is one of the biggest advantages of SIPPs as a wealth transfer vehicle — and it is set to change.
For deaths on or after 6 April 2027 that changes, and it is settled law rather than a proposal — the charge is in sections 66 to 71 of the Finance Act 2026. The fund value at death is included when calculating the estate for inheritance tax. HMRC's policy paper of 26 November 2025 states that personal representatives will be liable for reporting and paying any Inheritance Tax due on unused pension funds and pension death benefits, and that they can direct a scheme administrator such as HL to withhold up to 50% of the death benefits for up to 15 months from the date of death while the tax is settled. Death in service benefits from a registered pension scheme are excluded, as are dependants' scheme pensions from a defined benefit or collective money purchase arrangement, and the spouse, civil partner and charity exemptions are kept. This is a significant change for anyone who had deliberately left a SIPP untouched to pass on.
Read our detailed guide to pensions and inheritance tax from April 2027 for a full analysis of what is changing. Understanding the inheritance tax basics and the current IHT thresholds will help you assess the impact on your family.
If no expression of wishes is registered, HL still exercises its discretion. It will typically seek to identify a surviving spouse, civil partner, or financially dependent person. If no suitable beneficiary is found, the SIPP funds may be paid to the estate.
If paid to the estate, the funds become subject to the probate process and will be distributed under the terms of the will or intestacy rules. They may also be subject to inheritance tax if the estate exceeds the nil-rate band.