In March 2026, Torsten Bell MP, the Minister for Pensions, informed the House of Commons that NS&I had identified an issue where the estates of deceased customers were not always repaid money from all of their accounts following a bereavement claim. NS&I have now published a 'delivery plan' setting out how this will be rectified, and the tax implications for estates.
The error occurred due to the search process used when handling a bereavement claim failing to identify all NS&I products.
- Over 34 million records have been reviewed, and NS&I's assessment is that up to 34,000 estates have been affected, with a total value of £367 million.
This issue was resolved for current and new bereavement claims from January 2026.
What happens now?
NS&I will contact the personal representatives or executors of affected estates with capital holdings plus accrued interest of £10 or more, to reunite them with the full value of those holdings.
- NS&I are working with specialist data search providers to ensure they have the correct address and contact details for each personal representative and executor.
- Where an estate cannot be contacted, NS&I will continue to hold the funds, and these will continue to accrue interest (see below) until the estate gets in touch and the funds and interest can then be repaid.
- Beneficiaries will not be contacted directly unless they are also a personal representative or executor.
The first letters contacting the executors and personal representatives of affected estates will be sent out in the week commencing 28 May 2026. The payment will follow soon after.
- Letters will be dispatched in weekly batches. NS&I expect to complete the exercise in the first half of 2027.
NS&I will provide a dedicated telephone number for any queries.
What will be paid?
To ensure estates have not been disadvantaged, capital balances will be adjusted upwards to include the higher of the:
- Interest accrued since the error occurred.
- Bank of England base rate plus one percentage point.
This is in line with Financial Ombudsman Service principles.
Some estates may incur additional professional services costs, such as legal or administration fees, as a result of receiving an unexpected payment from NS&I.
- When NS&I write to personal representatives or executors with details of their payment, it will set out the process for submitting a request for reimbursement of reasonable legal costs.
- Claims for additional professional services costs incurred, such as legal or administration fees as a result of receiving an unexpected payment from NS&I, will be reviewed on a case-by-case basis.
What are the tax implications of the payments?
The Minister for Pensions, Torsten Bell MP, confirmed on 19 May 2026 that:
- Personal representatives or executors will not be liable for any Income Tax ordinarily due in their role on interest accrued before death or in the administration period.
- There will be a full Inheritance Tax exemption for the affected funds.
Useful guides on this topic
Estates: Income Tax and Capital Gains Tax
How do executors deal with income and capital gains arising from the deceased’s estate? What allowances and reliefs are available?
At a glance: How to calculate Inheritance Tax
What is Inheritance Tax (IHT)? When is IHT charged? How do I calculate IHT on an individual's estate? What rate of IHT applies?
Trusts & Estates: What's New 2026/27
HMRC's Trusts and Estates newsletters contain some useful information. This is our enhanced version for subscribers, including reminders of recent and upcoming changes.
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