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2027 Inheritance Tax ChangesOn this page you will find what the current rules mean for you, and what changes from 6 April 2027:
‘Your estate’: everything you own when you die (your home, savings and investments, and from April 2027 what is left in your pension).
‘Nomination of beneficiaries (also called an expression of wishes)’: the form that tells us who you would like your pension paid to when you die.
‘Tax-free cash (also called your tax-free lump sum)’: the part of your pension you can usually take without paying tax, normally up to 25%. The two names mean the same thing.
‘Drawdown’: leaving your pension invested and taking money from it as you need, rather than buying a guaranteed income (an annuity). Money you have not taken still counts as part of your pension.
‘Nil-rate band’: the amount of your estate that is tax-free (currently £325,000).
‘Executors (or personal representatives)’: the people who deal with your estate after you die.
Under the current rules, what is left in your pension is normally held outside your estate, so it is not usually subject to Inheritance Tax.
This is changing.
From 6 April 2027, what remains in your pension will normally form part of your estate for Inheritance Tax. Whether you have started taking your pension makes no difference.
Amounts left to a spouse or civil partner, or to charity, will remain exempt.
Whether any Inheritance Tax is due depends on the total value of your estate compared with the tax-free thresholds.
Nothing changes before 6 April 2027, and the detail of how it will work is still being finalised by HMRC.
From 6 April 2027, the value remaining in your pension when you die is brought into your estate, and Inheritance Tax is then worked out on the estate as a whole. What matters is simply what is left in your pension when you die, added to everything else you own.
When does it the change apply? The change applies if you die on or after 6 April 2027. The law is in place (Finance Act 2026).
Exemptions kept: anything passing to a husband, wife or civil partner, or to a charity, stays free of Inheritance Tax (gov.uk).
Income Tax is separate and is not changing, and your tax-free cash in your lifetime is not affected.
Who deals with it? Your executors work out and report any Inheritance Tax. As your pension administrator, we support that process.
Do the April 2027 changes apply to me? It depends on the total value of your estate (everything you own, and from April 2027 what is left in your pension) compared with the ‘tax-free thresholds’.
The tax-free thresholds
For many of our customers this is a real consideration. Around half of our members have a pension worth more than £325,000, which on its own is at or above the standard tax-free threshold, before the rest of their estate is counted.
If the total value of your estate, including what is left in your pension, is below the available thresholds, there is unlikely to be Inheritance Tax on your pension. If it is above, some Inheritance Tax may be due. A regulated financial adviser can help you work out your own position.
What counts towards your estate, and what does not
| Counts towards your estate | Does not count |
| What is left in your pension that you have not taken | Anything passing to a husband, wife or civil partner |
| Pension savings in drawdown that have not been paid out | Anything passing to a charity |
| Most cash sums paid from your pension when you die | Survivors’ pensions from final-salary schemes and joint-life annuities; your State Pension |
If your SIPP or SSAS holds commercial property
Many of our members hold commercial premises, land or other less liquid assets inside a SIPP or SSAS. From 6 April 2027 the value left in the pension counts towards the estate like any other asset. Because Inheritance Tax has a payment deadline, an asset that cannot be sold quickly needs more thought about how any tax would be met. The detail of how tax due on a pension will be paid is still being finalised by HMRC. As your administrator we cannot give advice, but we will support you and your adviser with factual information about your scheme.
Two simple examples
| Anne and Tom (married): no Inheritance Tax | David (leaving his pension to his children): some Inheritance Tax |
| Anne has a SIPP and names her husband, Tom, to receive it | David is widowed and names his two children to receive his SSAS. |
| When Anne dies, her pension passes to Tom. Anything left to a husband, wife or civil partner is exempt, so there is no Inheritance Tax to pay on her pension. | When David dies, the value left in his pension counts towards his estate. His total estate is above the available thresholds, so Inheritance Tax may be due on the part above them. |
| Tom does not pay Inheritance Tax on the pension he receives. | David’s executors work out and report any Inheritance Tax. As his SSAS mainly holds his business premises, it is worth planning ahead for how any tax would be met. An adviser can help. |
The change itself is set in law. How it will work in practice is still being finalised by HMRC, with final guidance expected spring 2027. We are not guessing at detail that could still change, including the exact steps, forms and timescales for settling any tax, and how any tax due from a pension is paid. This page will be kept up to date as each piece is confirmed.
This change is about how pensions are treated for Inheritance Tax when you die. It does not change the value of using a pension to save for your own retirement: pensions remain a well-established and tax-efficient way to do that, and the tax relief on contributions and the tax treatment of your pension in your lifetime are not affected.
It is rarely wise to make sudden changes to a pension because of a tax change that is still being finalised, and taking money out can create other tax to pay. If your pension forms part of how you intend to pass on wealth, the most useful step is to review your plans with a regulated financial adviser, and there is time to do that before April 2027.
InvestAcc administers your pension; we do not provide financial, tax or estate-planning advice. If you would like advice about how these changes may affect you personally, you should speak to a regulated financial adviser who can consider your individual circumstances and objectives. If you do not have a financial adviser, the Government-backed MoneyHelper service provides free and impartial guidance about pensions, retirement and later-life planning, and can help you understand the options available to you before seeking regulated advice.
No. The change applies if you die on or after 6 April 2027. Until then, the current rules apply and nothing about your pension changes today.
Inheritance Tax is only due if the total value of your estate is above the available thresholds. As a reminder: the first £325,000 is tax-free, rising to £500,000 if you leave your home to children or grandchildren (and your estate is under £2 million); and a surviving spouse or civil partner can inherit their partner's unused allowance, which can give them a threshold of up to £1 million on their death. Anything left to a husband, wife, civil partner or charity is exempt. Above the thresholds the rate is normally 40%. We cannot work out your personal position; a regulated financial adviser can (gov.uk).
We cannot advise you on this, and it is rarely a simple calculation. Taking money out of a pension can create its own Income Tax, and money you have withdrawn still counts as part of your estate unless you spend or give it away. Nothing changes before 6 April 2027, so there is no need to rush. If your pension is part of how you plan to pass on wealth, the most useful step is to review your plans with a regulated financial adviser. Remember too that anything passing to a husband, wife, civil partner or charity stays exempt.
That is a personal decision and we cannot advise you on it. Your nomination of beneficiaries tells us who you would like to benefit, and you can update it at any time. What changes from 2027 is the tax: amounts passing to a husband, wife, civil partner or charity stay exempt, while amounts passing to others may add to your estate for Inheritance Tax. It is worth checking your nomination is up to date and reviewing your wider plans with a regulated adviser. You can view your nomination on iFreedom (Minerva SIPP and SIPP Lite) or contact us.
No Inheritance Tax is due when your pension passes to your husband, wife or civil partner; that exemption is being kept. (Inheritance Tax may apply later, when they pass wealth on, depending on their own estate. An adviser can explain how that works for you.)
Inheritance Tax on an estate is normally due by the end of the sixth month after the person died, and interest is charged after that. Your executors arrange payment. This timing is one reason it can help to plan ahead, especially where a pension holds property or other assets that take time to sell (gov.uk: pay your Inheritance Tax bill).
We cannot advise you on that, and it is rarely a simple calculation. Taking money out can create its own Income Tax, and money you have withdrawn still counts as part of your estate unless you spend or give it away. There is no need to rush, as nothing changes before April 2027. Please talk it through with a regulated financial adviser first.
No. Drawdown means leaving your pension invested and taking money as you need it. Money in drawdown that you have not actually taken still counts as part of your estate from 2027. What matters is what is left in your pension when you die.
No. Your tax-free cash (also called your tax-free lump sum) is the part of your pension you can usually take without tax in your lifetime, normally up to 25%. That is not changing. This change is about Inheritance Tax on what is left in your pension when you die.
Not necessarily. From 6 April 2027 the value left in the pension counts towards your estate. Because Inheritance Tax has a payment deadline, planning ahead for how any tax would be met is sensible where a pension holds property. The detail of how tax due on a pension is paid is still being finalised by HMRC. This is a good thing to discuss with your adviser, and we will support that with factual information about your scheme.
Your executors calculate and report any Inheritance Tax for the whole estate, including your pension. As your pension administrator, we have duties to support them. The detail of how any tax due on a pension is paid is still being finalised by HMRC.
For most people the first step is simply to check your nomination of beneficiaries is up to date. If your pension is part of your estate plans, it is also worth reviewing them with a regulated financial adviser. We will keep this page updated as the rules are confirmed.
HMRC's technical note and the GOV.UK Inheritance Tax guidance are the official sources. You can speak to your financial adviser about your own circumstances.
This page reflects our understanding of the confirmed and proposed rules as at June 2026 and is not legal, tax or financial advice. Tax treatment depends on your individual circumstances and the rules may change. InvestAcc Pension Administration Limited does not provide advice of any kind.
