Pensions and inheritance tax: what's changing in April 2027

From 6 April 2027, most unused pension pots and pension death benefits will count towards your estate for inheritance tax (IHT) when you die. Until now they have usually sat outside it, which is why pensions have been a popular way to pass money on.

There's no need to panic, cash in your pension or buy anything because of this. Some of the detail, such as how the tax is reported and paid, is still being finalised. This page explains the change in plain English, so you can decide whether a conversation would be worthwhile.

What's changing

• Many people won't be affected, or only slightly. It depends on the size of your whole estate and the allowances that apply.
• It doesn't mean your pension is worth less, or that you'll definitely pay IHT.
• Your will, your pension nominations (who you've said should receive your pension) and your retirement plans may need to work together more closely than before.
• Check the details against HMRC guidance at the time you act.

Is this for you?

It could be worth a conversation if you:

• Have a pension that might pass to your family one day
• Own a business and hold your retirement savings alongside shares and property
• Have a will or trusts, and want to be sure your pension fits with them
• Have had a change in your family, such as marriage, divorce, remarriage, or the arrival of children or grandchildren, and haven't looked at who your pension would go to

It may be less urgent if your estate is unlikely to come near the IHT thresholds, even with your pension included.

How we can help

We can look at your pensions, who you've nominated to receive them, and how they fit with the wider picture of your estate that you share with us. We'll explain your options in plain English. If you'd like advice, we only give personal recommendations after we have taken time to understand your circumstances, what you want to achieve, and what you need. We'll be clear when something is for your solicitor, accountant or pension provider.

Other help you may need

• Wills and legal advice: a solicitor
• IHT calculations and tax returns: an accountant or tax adviser
• Care fees planning: a specialist adviser

Fees are explained in writing before any chargeable work starts.

Not sure whether this affects you? Call 0333 121 2129 or email advice@advancewealth.co.uk. There is no obligation.

Technical basis: Summary based on the publicly stated direction of travel for unused pension funds and pension death benefits to form part of the estate for Inheritance Tax from 6 April 2027, subject to final legislation and HMRC guidance. Confirm the legal position before publication.