17 Aug 2026
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From 6th April 2027, major changes to the way pensions are treated for Inheritance Tax (IHT) purposes are expected to come into effect.
For many people, pensions have traditionally been viewed as sitting outside their estate for Inheritance Tax purposes. However, the new rules could mean that many unused pension funds and pension death benefits are included when calculating the value of an estate, potentially increasing the amount of Inheritance Tax payable.
If you're reviewing your Will, thinking about estate planning, or simply want to understand how these changes could affect you and your family, now is a good time to seek advice.
In this article, we explain what is changing, who may be affected, and the steps you can take to ensure your estate planning remains effective.
From 6th April 2027, most unused pension funds and pension death benefits are expected to form part of a person's estate when calculating Inheritance Tax.
Historically, many pension arrangements have fallen outside the scope of Inheritance Tax, making them a valuable estate planning tool. The forthcoming changes represent a significant shift and mean that pensions should now be considered alongside your Will and other assets when planning for the future.
While not every estate will be affected, anyone with a pension should understand how the new rules could impact the value of their estate.
The changes are expected to apply to many pension arrangements that still hold value when someone dies.
This is likely to include:
In simple terms, if your pension has a remaining fund that can be passed on to your beneficiaries, it is likely to be relevant when calculating Inheritance Tax.
However, the precise treatment will depend on the individual pension scheme and your personal circumstances.
Yes, not every pension benefit will automatically form part of your estate for Inheritance Tax purposes.
Examples of benefits that are generally expected to remain outside the calculation include:
In addition, where pension benefits pass to a surviving spouse or civil partner, the usual spouse or civil partner exemption from Inheritance Tax will generally continue to apply.
Because pension schemes vary considerably, it's important to obtain advice based on your individual circumstances.
For some people, these changes could significantly increase the value of their estate for Inheritance Tax purposes.
This may mean:
Depending on the circumstances, beneficiaries receiving pension benefits may also need to consider any Income Tax implications that arise separately from Inheritance Tax.
The overall impact will vary from person to person, which is why reviewing your arrangements early is advisable.
Usually, no. One of the most common misconceptions in estate planning is that your Will determines who inherits your pension.
In most cases, pension providers will instead consider your Nomination Form or Expression of Wishes Form when deciding who should receive any remaining pension benefits.
This means it is possible for your Will and your pension nominations to point to different beneficiaries if they have not both been kept up to date.
For example, following marriage, divorce, the birth of children or other significant life events, many people remember to update their Will but overlook their pension nominations. Reviewing both together helps ensure your wishes remain consistent.
Estate planning is not simply about writing a Will.
It involves considering how all of your assets work together, including property, savings, investments, business interests and pensions.
With pensions becoming increasingly relevant for Inheritance Tax purposes, reviewing your wider estate planning can help you:
Taking advice before changes take effect can often provide more options than waiting until later.
If you have one or more pensions, it's sensible to review your arrangements before April 2027.
Some practical steps include:
Even if you have reviewed your Will recently, it may still be worth revisiting your estate planning in light of these forthcoming changes.
Pensions are regulated financial products, so effective estate planning often benefits from both legal and financial advice.
A solicitor can advise on your Will, estate planning and the legal implications of the new rules, while an independent financial adviser can help review your pension arrangements and wider financial planning.
Working together ensures that your plans are joined up and continue to reflect both your wishes and your financial objectives.
At Hegarty, our experienced Wills, Trusts and Probate team helps individuals and families plan confidently for the future.
Whether you're making a Will for the first time, reviewing an existing estate plan or want to understand how the 2027 pension changes may affect you, we can provide clear, practical legal advice tailored to your circumstances.
Where appropriate, we can also work alongside your financial adviser or introduce you to Hegarty Bulley Davey Wealth Management Limited (HBD Wealth Management) to ensure your legal and financial planning work together effectively.
To speak to one of our specialists, contact our Wills, Trusts and Probate team today.
No. The impact depends on the overall value of your estate, the value of your pension funds and who inherits them. Some estates may not be affected, while others could face a higher Inheritance Tax liability.
Not necessarily, but it's a good opportunity to review both your Will and your pension nominations to ensure they still reflect your wishes and work together effectively.
It's advisable to review them regularly, particularly after major life events such as marriage, divorce, or the birth of children.
We can advise on the legal aspects of estate planning and Wills. As pensions are regulated financial products, financial advice should be obtained from an appropriately authorised financial adviser.
Planning ahead today could make a significant difference for your loved ones tomorrow.
If you would like advice about making or updating your Will, reviewing your estate planning, or understanding how the pension changes from April 2027 may affect you, our experienced team is here to help.
Whatever legal support you need, our experienced and highly skilled solicitors and legal advisors are here to help. With expertise across a wide range of legal areas, we provide clear, practical advice tailored to you. What sets us apart is our commitment to understanding your needs and delivering the best possible outcome with a personal touch.
