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What do the 2027 inheritance tax pension change mean for me?

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Inheritance Tax and Your Pension

The 2024 Autumn Budget introduced significant changes to how pension death benefits will be taxed. Under the new rules, most unused pension death benefits will now form part of your estate for inheritance tax (IHT) calculations. This means up to 40% of your pension could be lost to inheritance tax.

These changes are due to take effect from 6 April 2027.

With this shift, many retirees may need to reassess their Inheritance Tax strategies and make informed decisions about their pension plans. Expert inheritance tax advice can provide you with the clarity and options you need. Your adviser will guide you through the available choices, helping you plan ahead with confidence.

What is changing in April 2027?

Under current rules, most pensions are not included in your estate when calculating inheritance tax — which makes them one of the most tax-efficient ways to pass on wealth.

However, the government has confirmed that from 6 April 2027:

  • Unused pension pots (those not yet accessed) may count toward your taxable estate.
  • This could result in 40% tax on anything above the £325,000 inheritance tax threshold.
  • Even pensions left to children or grandchildren may be affected.

What does this mean for me?

  • If you have a property, savings and pensions you could easily exceed the threshold and leave your family with a large, avoidable tax bill.
  • Now is the perfect time to review how you're incorporating pensions into your retirement and estate planning.
  • Connect with a local adviser to explore your pension withdrawal strategy, help you navigate the changes and explain all your pension income options.
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Why it's important to get advice

  • Inheritance tax rules are complex and frequently change getting advice helps you stay compliant and avoid costly mistakes.
  • An adviser can help you make full use of allowances and exemptions to reduce or eliminate your IHT liability.

  • Proper planning could save your loved ones thousands and ensure more of your estate goes to the people you choose, not the taxman.

Why use our service?

Making decisions about your pension is important, and getting the right advice can make all the difference. Our service connects you with trusted, FCA-regulated advisers who are ready to help you navigate your pension choices.

  • Free and impartial - There’s no charge for using our service — we’ll match you with a qualified adviser at no cost to you.
  • Quick and convenient - It takes less than a minute to be matched with an adviser who understands your needs.
  • Advisers near you - Our nationwide network means you’ll be connected with someone local, so you can choose how and when to speak.

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*Over £26.6 billion in lost pensions highlights need for retirement planning — Peter Lawson Financial News, November 2023. Read the full article