Your Pension & Inheritance Tax: The 2027 Changes
From 6 April 2027, most unused pension funds will count towards inheritance tax for the first time. Nine in ten people have no idea this is coming.
From 6 April 2027, most unused pension funds and certain death benefits will be included in the value of your estate when inheritance tax is worked out. For some families, that could mean a tax bill that simply did not exist before – and many people who never expected to pay inheritance tax may now be caught.
At Pensions Advice UK, we connect you with FCA-authorised financial advisers who can help you understand how the changes affect you and what options you have. We do not provide financial advice, and we do not provide tax advice. We act solely as an introducer.
What is actually changing
- Pensions come into the estate – from April 2027, most unused defined contribution pension funds and some death benefits will count towards your estate for inheritance tax.
- The threshold has not moved – the nil-rate band has been frozen at £325,000 since 2009, so rising property and investment values are pulling more ordinary families into scope.
- Bigger bills for some – the change is expected to push tens of thousands of estates into higher inheritance tax bills.
- Behaviour is already shifting – some people are reviewing how and when they draw their pension, and how they pass wealth on, well ahead of the deadline.
Why it is worth reviewing now, not in 2027
Estate planning takes time to do well, and some options work best when started early. Acting in a rush close to the deadline can lead to decisions that leave you short of income later, or that do not achieve what you hoped. Reviewing your position now gives you the room to plan properly.
This is a complex area that brings pensions, tax and estate planning together. The right approach depends entirely on your own circumstances – your family, your other assets, your income needs and your wishes. A qualified adviser can assess all of that and explain your options. That is exactly the kind of personalised assessment we are unable to give you, which is why we introduce you to an authorised firm.
Submitting your enquiry is free. Any fees for advice will be explained to you directly by the authorised firm before you proceed.
Common questions
Will my pension really be taxed when I die?
From 6 April 2027, most unused pension funds are due to be included in your estate for inheritance tax. Whether any tax is actually due depends on the total value of your estate and your personal circumstances. An adviser can help you understand your own position.
I never thought inheritance tax applied to me – could it now?
Possibly. With the threshold frozen since 2009 and pensions coming into scope, more families are being affected than before. It is worth checking rather than assuming.
What can I do about it?
There are a number of legitimate planning options, but the right one depends on your circumstances and getting the balance right matters – you should not give away or draw down so much that you leave yourself short. A qualified adviser can talk you through what suits you.
Do you give tax advice?
No. Pensions Advice UK does not provide financial or tax advice. We introduce you to FCA-authorised advisers, and you may also wish to speak to a tax specialist.
Important information
Pensions Advice UK is a trading name of GAP-GNX Ltd. We are not authorised by the Financial Conduct Authority and we do not provide financial, investment, pension or tax advice. We act solely as an introducer.
The information on this page is general information only. It is not a personal recommendation and should not be relied upon when making decisions about your pension. Whether any course of action is right for you depends on your individual circumstances.When you make an enquiry, we may introduce you to an FCA-authorised financial adviser.
Any advice, recommendation or regulated service will be provided by that authorised firm, not by Pensions Advice UK. The authorised firm will explain its services and any fees to you directly before you decide to proceed. FCA-authorised firms may have their own criteria for accepting clients, over which we have no control.
The value of pensions and investments can fall as well as rise, and you may get back less than you put in.
Past performance is not a guide to future returns. Transferring or combining pensions is not right for everyone and may mean giving up valuable benefits or guarantees.Free and impartial guidance about your pension options is available from the government’s MoneyHelper service, and if you are aged 50 or over from Pension Wise, at moneyhelper.org.uk.
