Pensions and Inheritance Tax 2027

For decades, pensions have been one of the most tax-efficient ways to pass on wealth — usually sitting entirely outside your estate for inheritance tax purposes. That is changing. From 6 April 2027, most unused pension funds and certain death benefits will be brought within the value of a person's estate for inheritance tax for the first time, ending one of the biggest planning advantages pensions have ever offered. It is arguably the single biggest pension tax story of recent years, and it affects far more households than most people assume: with the £325,000 nil-rate band and £175,000 residence nil-rate band both frozen while property and pension values have risen, adding a pension pot into the estate calculation can tip an otherwise untaxed estate into paying inheritance tax for the first time.

This shift touches everything from how you sequence your retirement income to how carefully you keep your beneficiary nominations up to date, and it changes the calculations behind the traditional "spend other assets first, leave the pension untouched" approach to estate planning. It can also mean pension money is taxed twice in some circumstances — once through inheritance tax on the estate, and again through income tax when a beneficiary draws it down, particularly where the original pension holder died after age 75.

The guides below break the whole topic down in plain English: what's actually changing and why, how death benefits are taxed depending on the age at which someone dies, how to nominate your beneficiaries correctly across every pension you hold, and how to think about passing a pension to children or grandchildren as tax-efficiently as the new rules allow. None of this is financial or legal advice — but understanding the shape of the changes now, well ahead of April 2027, gives you time to review your own plans properly rather than being caught out later.