What can I do before pensions come into inheritance tax in April 2027?

Start by working out whether your estate, with your pensions added, will be above the nil rate bands available to it. If it will not, the change makes no difference to you. If it will, the options include updating your expression of wish forms, regular gifts from surplus income, gifts that start the seven year clock and life cover written in trust.

Working out whether it affects you

  1. 1

    List every pension

    Include schemes from jobs you left years ago. The government's Pension Tracing Service finds contact details for a scheme you have lost touch with.

  2. 2

    Ask each scheme for a value

    Your annual statement gives one. After a death, executors can ask the scheme for the figure and the scheme has 28 days to provide it.

  3. 3

    Add everything else

    Your home, savings, investments and other assets, less debts. Anything left to a spouse, civil partner or charity is exempt.

  4. 4

    Set the total against your bands

    £325,000, plus up to £175,000 where a home passes to direct descendants. A married couple or civil partners can combine both, and the residence band tapers above £2 million.

The options

Expression of wish forms
One for each pension, telling the scheme who you would like to receive the money. Updating one costs nothing.
Gifts out of surplus income
Regular gifts from income you do not need, which leave your standard of living intact, are exempt immediately and have no upper limit. Keep records of income and spending to show the conditions are met.
The annual exemption
£3,000 a year can be given away free of inheritance tax, and an unused exemption carries forward one year.
Gifts that start the seven year clock
A larger gift leaves the estate in full if you survive seven years. The seven year rule explains taper relief.
Life cover written in trust
A life policy held in trust does not normally form part of your estate, so it can provide the money to settle the bill.
The order you spend in
Drawing on the pension earlier and keeping other savings longer changes what is left in each. Pension income is taxed as income when it is drawn.

The dates

A gift made in October 2026 is outside the estate entirely if the giver lives to October 2033.

Related questions

Is it too late to do anything?

No. The rule applies to deaths on or after 6 April 2027, and steps such as updating nominations or starting regular gifts can be taken before or after that date.

Will the Budget on 28 October change the April 2027 rule?

The rule is in Finance Act 2026. A Budget can propose changes to it, and a change would need legislation. As at 13 October 2026 the rule stands as enacted.

Should I take money out of my pension to give it away?

Money drawn from a pension is taxed as income in the year it is taken, so a large withdrawal can be taxed at 40% or more before it is given away. Whether drawing more makes sense depends on your income, your estate and how long the money has to last.

Does the change affect my pension while I am alive?

No. It applies to what is left in the pension when you die. What you can take and when stays the same.

Where this fits

Working out whether April 2027 affects you starts with the size of your estate with the pension in it.

Budget 2026 and your pensions, ISAs and inheritance taxGet a complimentary health check

The advisers for this subject

Sunny Bharj

Sunny Bharj

Independent Financial Adviser

Tony Springer

Tony Springer

Independent Financial Adviser

Advising through Equity & General Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority. Check the firm on the FCA register under number 474163.

Talk to an adviser

The first conversation takes about twenty minutes and is 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.

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