Free tool
Pensions & inheritance tax 2027 checker
From 6 April 2027 most unused pension savings are expected to count towards your estate for inheritance tax. For some families that could mean tax of up to 67 percent on what is left in a pension. Check your position in two minutes.
What is changing in April 2027?
Until now, most defined contribution pensions have been outside your estate for inheritance tax. For deaths on or after 6 April 2027, unused pension funds and most death benefits are expected to be added to the estate, and the pension scheme will pay any inheritance tax due on them.
If you die aged 75 or over, your beneficiaries also pay income tax on what they draw from the inherited pension. That combination is why the effective tax rate can be so high.
What can you do?
- Review whether to draw more pension income and gift it, or use it to fund life cover written in trust
- Check who you have nominated to receive your pension, and whether a spouse or civil partner should come first
- Look again at the order you spend your savings, ISAs and pensions in retirement
- Make sure your will, lasting powers of attorney and expression of wish forms are up to date
Important information
The value of pensions and investments can fall as well as rise and you may get back less than you put in. Pension and tax rules can change, and their effect depends on your circumstances.
The Financial Conduct Authority does not regulate tax, trust or estate planning advice. Tax treatment depends on individual circumstances and may change in the future.
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Q&A
Questions & answers
Will my pension be subject to inheritance tax?
For deaths from 6 April 2027, most unused pension funds and death benefits are expected to be included in your estate. Pensions left to a spouse or civil partner remain exempt, as do some death-in-service benefits.
Is the pension also taxed as income for my children?
If you die aged 75 or over, beneficiaries normally pay income tax at their own rate on money they draw from an inherited pension. If you die before 75, withdrawals are usually free of income tax.
Who pays the inheritance tax on a pension?
Under the announced rules, the personal representatives are responsible for reporting and paying, and can ask the pension scheme to pay the tax due on the pension directly.
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