Pensions and Inheritance Tax – Important Changes from 6 April 2027

From 6 April 2027, significant changes will be introduced to the way pensions are treated for Inheritance Tax purposes.

Under the new rules, most unused pension funds and pension death benefits will be included when calculating the value of a deceased person's estate for Inheritance Tax.

For many people, pension savings form a significant part of their overall wealth. Including these funds within the estate for Inheritance Tax purposes could therefore increase the value of some estates and, in certain circumstances, create or increase an Inheritance Tax liability.

The changes will also have implications for Probate and Estate Administration. Personal representatives responsible for administering an estate will be responsible for reporting and paying any Inheritance Tax due in relation to affected pension funds, with information needing to be exchanged between personal representatives and pension scheme administrators.

Not all pension-related benefits will be affected. For example, death-in-service benefits payable from registered pension schemes will remain outside the scope of Inheritance Tax under the new rules.

The changes apply where a pension scheme member dies on or after 6 April 2027.

With pensions increasingly forming an important part of family wealth, individuals may wish to review their Will, pension nominations and wider Estate Planning before the new rules take effect to ensure their arrangements continue to reflect their wishes and circumstances.

Source: HM Revenue & Customs (HMRC) / GOV.UK – Inheritance Tax on Pensions, Finance Act 2026