For deaths before 6 April 2027, money left in most pensions passes outside your estate and carries no inheritance tax. For deaths on or after that date, unused pension funds and lump sum death benefits count as part of your estate.
Until 6 April 2027, a pension held in a scheme where the trustees decide who receives the money sits outside your estate. No inheritance tax is charged on it. That is why a pension has been treated as the last thing to spend and often the best thing to leave.
A small number of schemes, mostly older public sector ones where the payment is not discretionary, were already inside the estate. The new rule removes that difference by bringing almost everything inside.
The date of death is what counts, and not when the money is paid out.
No. The rule applies to deaths on or after 6 April 2027. The date of death is what counts, not when the money is paid out.
They may. If you die at 75 or over, whoever inherits pays income tax at their marginal rate on what they take out. That is separate from inheritance tax and it is not changing. Money left to a spouse or civil partner escapes both.
No. The change concerns what happens to unused pension money when you die. It does not alter what you can take while you are alive.
No. Both are money purchase arrangements and both are caught.
Whether April 2027 changes anything for you comes down to the size of your estate and who you are leaving it to. That is an hour's work to establish.
Independent Financial Adviser
Independent Financial Adviser
A first conversation of about twenty minutes, at no cost to you. Tell us what is on your mind: a pension you have lost track of, a fixed rate ending, a will you keep meaning to write.