Money moves inside the 40% net
Money you thought was outside the 40% net moves inside it. An estate that currently sits comfortably under the allowances can be pushed over once a pension pot is added.
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Probate & estate guidance
What the 2027 pension and IHT changes mean for you.
For the last decade, defined contribution pensions have sat outside inheritance tax. From 6 April 2027, that changes: most unused pension funds and death benefits will be counted as part of your estate for inheritance tax, with your personal representatives responsible for reporting and paying any tax due. HMRC estimates around 10,500 estates a year will become liable for the first time, and a further 38,500 will pay more, on average around £34,000 more.
6 Apr 2027
Date the rules are due to take effect
£2m
Estate size where the residence nil rate band starts tapering
£325k
Single-person threshold worth checking against
The specific challenges
What makes pension holders (2027 changes) accounting different.
A double effect on the residence nil rate band
Because the residence nil rate band tapers away for estates over £2 million, a large pension can also erode an allowance you were counting on for the family home, a double effect that surprises people.
Who is less affected
Those leaving everything to a spouse or civil partner are less affected, because the spouse exemption continues to apply, though tax may then be a question for the survivor's estate. Death in service benefits from registered pension schemes are excluded from the charge.
How we help
What we do for pension holders (2027 changes).
2027 pension exposure checker
Enter your estate and pension figures and see whether the change is likely to affect your family, and by roughly how much.
Treat planning as provisional
The final legislation and HMRC guidance are still bedding in, so treat any planning as provisional and revisit it before April 2027.
A specialist if it is material
If the exposure is material, we can connect you with a vetted estate planning specialist.
Questions from pension holders (2027 changes)
Will my pension be subject to inheritance tax?
From 6 April 2027, most unused defined contribution pension funds and death benefits are due to count as part of your estate for inheritance tax. Anyone with a meaningful pension pot they do not expect to fully spend should check their exposure, especially where the estate including the pension approaches £325,000 for a single person, or around £1 million for a couple.
Who is less affected by the 2027 pension changes?
Those leaving everything to a spouse or civil partner, because the spouse exemption continues to apply. Death in service benefits from registered pension schemes are excluded from the charge, and pensions remain a highly tax-efficient way to fund your own retirement.
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Book a free call. We will talk through your position and whether there is anything worth changing. No hard sell, no obligation.
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