2027 UK IHT Changes Don’t Force Pension-First Drawdown From April 6
Updated
Updated · Professional Adviser · Aug 28
2027 UK IHT Changes Don’t Force Pension-First Drawdown From April 6
1 articles · Updated · Professional Adviser · Aug 28
Summary
From 6 April 2027, most unused pension funds and pension death benefits will count toward inheritance tax, but Joshua Croft says that does not automatically make spending pensions first the best strategy.
Croft argues the tax change has prompted an overly simple reversal of the old drawdown order—taxable assets first, ISAs next, pensions last—by focusing too narrowly on tax paid after death.
Pensions may still face a double hit if death occurs after 75, with inheritance tax on the estate and income tax when beneficiaries draw benefits, yet Croft says overall outcomes can still favor a mixed withdrawal plan.
The broader point is that retirement-income sequencing should be tailored across taxable assets, ISAs and pensions rather than reset to a new one-size-fits-all rule.