For years, pensions have been one of the most tax-efficient ways to pass on wealth. But the rules are changing — and if you're not prepared, your family could lose a significant chunk of what you intended to leave behind.
🔺 What’s Changing?
From 6 April 2027, pensions will no longer be automatically exempt from inheritance tax (IHT). Currently, most defined contribution pensions sit outside of your estate for IHT purposes — making them a powerful estate planning tool. That protection is set to end.
💸 What Does That Mean?
If you die after 5 April 2027, the value of your pension will now count towards your estate, potentially pushing it above the IHT threshold. Anything above that threshold could be taxed at 40%.
And it doesn’t stop there. If you die after age 75, any pension passed to your beneficiaries is already subject to income tax when they draw from it. That could mean two layers of tax — inheritance tax and income tax — dramatically reducing what your loved ones receive.
🧠 Time to Rethink Your Plan
This double tax hit means it's more important than ever to take action:
✅ Why It Matters Now
These changes don’t come in until 2027 — but smart planning starts today. The sooner you act, the more options you may have to protect your wealth and provide for your loved ones.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
Please note that the FCA do not regulate will writing, tax planning and trusts.
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