Pensions and Inheritance Tax From April 2027
Andrew Tricker, 12 October 2026
Andrew Tricker, 12 October 2026
In brief, from 6 April 2027, most unused pension funds and pension death benefits are due to be included in a person’s estate for inheritance-tax purposes. This does not mean everyone should withdraw pensions quickly. It means retirement and estate planning should be reviewed together.
The measure applies to deaths on or after 6 April 2027. Personal representatives will be responsible for reporting and paying inheritance tax due on unused pension funds and death benefits. Death-in-service benefits from registered pension schemes and certain dependant scheme pensions are excluded. Existing spouse, civil-partner and charity exemptions remain.
Many families have treated pensions as both retirement capital and an efficient asset to pass to beneficiaries. The new rules can change which assets are used first in retirement and withdrawal strategy needs to be reassessed. The upcoming changes will create additional work for personal representatives, beneficiaries and pension schemes regardless of the pension size.
Do not make irreversible decisions solely because of a headline. Withdrawals can create income tax, remove money from a tax efficient pension environment and expose cash to spending, investment or estate-planning risks. Decisions need modelling.
We regularly host and take part in inheritance tax events alongside solicitors and accountants, bringing together different areas of expertise to help families understand the financial, tax and legal considerations involved. A financial planner can help explore affordability and retirement choices, while accountants and solicitors can provide specialist tax, legal and estate-administration advice.
LFWM can model alternative retirement and gifting strategies without assuming that tax minimisation is the only goal. The objective is a sustainable plan that reflects lifestyle, control, family priorities and risk.
Book a no-obligation financial health check with LFWM to discuss your goals, existing arrangements and whether personalised financial planning could add value.
Disclaimer: This article is for general information only and does not constitute financial, investment, tax or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments and income from them can fall as well as rise, and you may get back less than you invest. Tax and estate planning and cashflow modelling are not regulated by the Financial Conduct Authority.
