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Pension Changes from 2027: What Might They Mean for You and Your Family?

Published: 22/06/2026
Written by Curwens Solicitors

For many years, pensions have been a useful part of inheritance tax planning. As well as providing income in retirement, most pension funds have usually sat outside a person’s estate for inheritance tax purposes. This has meant that unused pension savings and death benefits could often pass to chosen beneficiaries without the 40% inheritance tax charge that may apply to other assets.

That position is changing. For deaths on or after 6 April 2027, the government intends that most unused pension funds and pension death benefits will be included in the value of a person’s estate for inheritance tax. For many families, this will require a fresh look at Wills, pension nominations and wider estate planning.

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What is changing?

At present, many pension schemes give trustees or the pension provider discretion over who receives death benefits. Because the pension holder does not usually control those funds through their Will, the pension is commonly outside the taxable estate.

From April 2027, most unused pension funds and death benefits will instead be brought into account when inheritance tax is calculated. HMRC’s technical note confirms that personal representatives, usually the executors appointed under a Will, will be responsible for reporting and paying any inheritance tax due on those pension funds.

There are exceptions. Death in service benefits from a registered pension scheme are expected to remain outside the inheritance tax calculation. Benefits passing to a surviving spouse or civil partner should also continue to benefit from the usual spouse exemption. Even so, once both spouses or civil partners have died, unused pensions may become much more important to the family’s tax position.

Why does this matter?

Whilst fewer than 5% of deaths in the UK result in an IHT charge, where it hits, it bites. Inheritance tax is currently charged at 40% on the value of an estate above the available allowances. These include the nil rate band of £325,000 and, where a qualifying home passes to direct descendants, the residence nil rate band of up to £175,000. Married couples and civil partners can often transfer unused allowances between them.

In reality, for homeowners with savings, investments and a sizeable pension pot, the new rules may bring the estate over the available thresholds. Government figures indicate that around 10,500 estates may pay inheritance tax for the first time, with a further 38,500 paying more.

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This may also create practical issues for executors. They may need to identify all pension arrangements, obtain values, liaise with pension providers and ensure inheritance tax is paid correctly. HMRC has indicated that personal representatives may be able to ask pension scheme administrators to withhold part of a taxable benefit and pay tax directly, but this still adds to the administration burden at a difficult time.

What should you review now?

A sensible starting point is to look at your estate as a whole: your home, savings, investments, business interests and pensions etc. Professionals such as chartered financial advisers, accountants and solicitors can then help you understand how the new rules may affect your family and whether any planning steps are appropriate.

You should also review your pension nomination forms. Your Will does not usually decide who receives pension death benefits, but pension providers will generally take your expression of wishes into account. Old nominations can cause delay or unintended outcomes, particularly after marriage, divorce, bereavement or changes in family relationships.

We would advise that your Will should be reviewed at the same time. The inclusion of pension value for inheritance tax purposes may mean you want you to consider making changes to affect the overall balance of your estate plan, including gifts to children, trusts, charities or a surviving spouse or civil partner.

A timely conversation

The new rules do not mean that pensions are no longer valuable. They remain an important and tax-efficient way to save for retirement. What is changing is the assumption that unused pension wealth can always be passed on outside the inheritance tax net.

For clients in their 50s, 60s and 70s, this is a good time to take advice and consider your position. A careful review now can help ensure that your Will, pension nominations and financial planning still work together, so your wishes are clear and your family is not left with avoidable uncertainty, and an unnecessary tax bill.

If you would like to review your Will, please contact our Private Client team.

Anne Stennett is the Head of the Private Client Department at Curwens. She has been a solicitor for over 30 years, and been with Curwens for more than 25 of them. Feel free to contact Anne Stennett on: 020 8363 4444, or email This email address is being protected from spambots. You need JavaScript enabled to view it..

Please note that our briefings are for informational purposes only, and do not constitute legal advice.

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