UK to Tax Unused Pensions in Estates From April 2027, Potentially Hitting 10,500 More
Updated
Updated · HeraldScotland · Aug 29
UK to Tax Unused Pensions in Estates From April 2027, Potentially Hitting 10,500 More
3 articles · Updated · HeraldScotland · Aug 29
Summary
From April 2027, unused pensions will count as part of a deceased person’s estate for UK inheritance tax, ending a long-standing exemption.
Government projections say 213,000 estates will include pension wealth and about 10,500 could face an inheritance tax bill that would not have applied under current rules.
The change may reach beyond very wealthy households because the £325,000 nil-rate band remains frozen, while rising asset values pull more moderate estates into scope of the 40% tax.
Married couples and civil partners can still combine allowances and the residence nil-rate band to shield up to £1 million, while unlimited transfers between spouses remain exempt.
Unmarried couples face greater planning pressure before 2027, especially as beneficiaries may also owe income tax on pension benefits if the saver dies after age 75.