⏰ April 2027 deadline:55d 9h 25m 51sremaining to review your estate plan
Your pension could now
be subject to inheritance tax
From April 2027, unused pension funds will be brought within the scope of IHT for the first time. If you have pension savings, your estate planning needs to be reviewed now.
The rule change
What is changing in April 2027?
Currently, pension funds sit outside your estate for inheritance tax purposes — one of the most valuable tax advantages available to savers. That is about to change.
Before April 2027
- Unused pension funds pass outside your estate
- No IHT on pension savings left to beneficiaries
- Pensions are one of the most tax-efficient ways to pass on wealth
- Drawdown pensions can be inherited free of IHT
From April 2027
- Unused pension funds included in your taxable estate
- IHT at 40% applies above the nil-rate band threshold
- Combined with other assets, many more estates will be affected
- Existing estate plans may no longer be fit for purpose
Example: estate impact
A couple with a combined estate of £600,000 and £200,000 in unused pension savings could see their IHT liability increase by up to £80,000 under the new rules — without any other changes to their circumstances.
Are you affected?
Who needs to act before April 2027?
Pension savers with large pots
If you have significant pension savings you are unlikely to draw down fully in retirement, your estate could be significantly affected.
Estates above the nil-rate band
If your total estate — including property, savings, and now pensions — exceeds £325,000 (or £500,000 with the RNRB), IHT may apply.
Those who use pensions for legacy planning
Many people deliberately left pensions untouched to pass on to children. This strategy needs to be reviewed urgently.
Retirees in drawdown
If you are in income drawdown and have a remaining pension pot, that pot will now be counted as part of your estate.
Business owners with SIPPs
Self-invested personal pensions used as part of a wider wealth strategy may need restructuring before the deadline.
Anyone without an up-to-date estate plan
If your will, pension nominations, and IHT planning have not been reviewed recently, now is the time to act.
Your options
What can you do about it?
There are a number of legitimate planning strategies available — but the right approach depends on your individual circumstances. An independent financial adviser can help you find the most effective solution.
Review your pension nominations
Ensure your expression of wishes is up to date and reflects your current intentions for who should receive your pension.
Consider drawing down more strategically
Adjusting how and when you draw from your pension can reduce the amount subject to IHT while maintaining your income.
Explore gifting and trust strategies
Structured gifting, potentially exempt transfers, and trust arrangements can help reduce your overall estate value.
Review your will and overall estate plan
Your will may need updating to reflect the new rules — particularly if it was written with pensions sitting outside your estate.
Consider life insurance to cover the liability
A whole-of-life policy written in trust can provide a lump sum to cover any IHT liability without reducing the estate passed to beneficiaries.
Why SBC Financial
Independent advice you can trust
As an independent financial adviser based in Haddington, East Lothian, we are not tied to any product provider. That means our advice is always in your best interest — not driven by commission or product targets.
FCA regulated
Authorised and regulated by the Financial Conduct Authority (FCA ref 997666).
Whole of market
We search the whole market to find the most suitable solutions for your circumstances.
Scottish specialists
We understand Scottish tax rates, thresholds, and the specific planning considerations for clients in Scotland.
Find out how the April 2027 changes affect your estate
Book a free, no-obligation consultation with one of our independent financial advisers. We will review your current position and explain your options in plain English.
SBC Financial is authorised and regulated by the Financial Conduct Authority (FCA ref 997666). The value of investments can go down as well as up. Tax treatment depends on individual circumstances and may be subject to change.