The major change ahead
Pensions and Inheritance Tax from April 2027
For deaths on or after 6 April 2027, most unused pension funds and pension death benefits will be brought into the estate for Inheritance Tax.
General education, not personal financial, legal or tax advice.
The operative date in Finance Act 2026. Existing plans should be reviewed before—not assumed invalid after—that date.
What changes
The value of most unused pension funds and pension death benefits will be treated as notional pension property within the deceased member’s estate. This removes much of the former distinction between discretionary and non-discretionary payment structures for IHT purposes.
Personal representatives will be responsible for reporting the estate and IHT. HMRC’s implementation includes information sharing with pension schemes, withholding notices and a direct payment mechanism. HMRC has said further secondary legislation and operational guidance will continue to be published ahead of April 2027.
What is not simply “all pensions”
Specified exceptions remain. GOV.UK identifies excluded or exempt benefits, funds below £1,000 and continuing annuities in the published measure, and confirms that death-in-service benefits from registered pension schemes will be outside the estate for IHT. Scheme-specific benefits still need checking.
Why nominations still matter
An expression of wish can still guide trustees or administrators about who should receive pension benefits. Beneficiary choice also affects the later Income Tax position. The new IHT treatment does not make nominations irrelevant, but it means a pension should no longer be treated as automatically outside the IHT conversation.
Drawing pension money solely to “beat IHT” can create Income Tax, investment, longevity and benefit consequences. Compare the whole plan with a regulated adviser and, where needed, a tax adviser.
A sensible review checklist
- Request current pension values and death-benefit rules.
- Review nominations and family circumstances.
- Model the estate both before and after 6 April 2027.
- Check likely Income Tax for beneficiaries as well as IHT.
- Coordinate pension, will, trust and liquidity decisions.
Know when to bring in help
Turn an estimate into the right conversation
A financial adviser can consider regulated planning. A solicitor can help with wills and trusts. A tax adviser can address complex tax positions. Inheritance Tax Doctor is not currently accepting or sharing consumer enquiries.
Direct answers
Frequently asked questions
When do the new pension Inheritance Tax rules start?
The change is due to apply to deaths on or after 6 April 2027.
Will every pension be included in the estate?
No. The measure is aimed at most unused pension funds and death benefits, while some exclusions remain. Scheme and benefit type must be checked.
Do pension beneficiary nominations still matter?
Yes. A nomination can still guide scheme administrators and affect who receives benefits, even though the Inheritance Tax treatment is changing.