Inheritance Tax And Pensions Explained

Inheritance Tax and Pensions explained: How the rules are changing

Inheritance Tax (IHT) has always been a key consideration for families looking to pass on their wealth. Traditionally, pensions have played a unique role in estate planning because, in most circumstances, they fell outside of IHT. This position is now set to change, and from 6 April 2027, pensions will be included in the value of an estate for Inheritance Tax purposes. Ashley Partridge, Partner and Head of our Wills, Probate and Estate Planning department, explains more about the current rules relating to pensions, what is changing and how you can prepare now.

How pensions are treated under the current rules

For many people, their pension is one of their most significant assets. This means the reform could bring more estates above the IHT threshold, leading to higher tax bills for beneficiaries.