Pensions & Inheritance from April 2027
From 6 April 2027, unused pension pots and pension death benefits will officially be included in your estate for UK Inheritance Tax (IHT) calculations.
For decades, pensions sat safely outside the estate—making them a primary tool for passing down wealth untaxed. That protection is ending.
Here is why you must review and update your Will now:
Key Impact & Action Plan
Check Your Thresholds & Tapering
Pushing pensions into your estate could easily trigger or increase a 40% IHT bill.
It may also push your total estate over £2 million, tapering away your Residence Nil Rate Band (RNRB) home allowance.
Align Pensions and Wills
Discrepancies between your Will, Letter of Wishes, and Pension Expression of Wish forms can cause significant conflicts.
Ensure spousal exemptions are fully utilised (transfers between spouses/civil partners remain tax-free).
Protect Your Personal Representatives
Executors/Personal Representatives will bear the burden of identifying, valuing, and reporting all pension assets before distributions occur.
Explicit instructions in your estate planning documents ensure your representatives have the authority, clarity, and liquidity needed to manage tax liabilities without delaying probate.
Concrete Next Steps
Review Your Pension Expressions of Wish: Request updated forms from your pension providers and check who is designated as your beneficiaries.
Re-evaluate Lifetime Planning: Consider structured lifetime gifting or drawing down pension wealth strategically ahead of April 2027.
Contact us to discuss a Will Review: Ensure your Will works in harmony with your broader financial layout so your heirs aren't left with unnecessary administrative delays or surprise tax burdens.
As always, we are here to help and our advice is free of charge at all times, you only pay if you instruct us to act on any matter.
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