Don’t assume inheritance tax is only a concern for the very wealthy. As pension savings become part of the calculation from 2027, more families may find themselves paying the tax for the first time.
For years, many people have viewed their private pension as more than just a way to fund retirement. It’s also been one of the best ways to leave money to children and grandchildren, because pension savings have generally sat outside the inheritance tax system.
From 6 April 2027, that is set to change.
Most unused pension savings will be included when calculating the value of an estate for inheritance tax purposes. For some families, this could mean facing an inheritance tax liability for the first time or paying more than they had anticipated.
A lot of people assume inheritance tax is something that only affects the very wealthy. The reality is that many people’s homes and investments have grown significantly in value over the years, while the amount that can typically be passed on before inheritance tax applies, has remained unchanged at £325,000 since 2009.
With pensions set to form part of inheritance tax calculations from April 2027, now may be a good time to speak to your financial adviser, review your finances and ensure your plans still reflect what you want to happen in the years ahead.
The changes don’t mean everyone will face an inheritance tax bill. Additional allowances and exemptions remain available, including those for homeowners passing property to direct descendants, and many estates will continue to fall below the relevant inheritance tax thresholds.
However, the changes should be seen as a prompt to review your plans. The new rules do not come into force until 6 April 2027, giving you time to understand the impact and make sure arrangements are up to date.
“The important thing is not to make rushed decisions,” says Anna Davies, Proposition Director at Openwork. “Taking some time to review the value of all your pensions, and who you want to inherit them can help you understand whether these changes are likely to affect you.”
“A financial adviser can guide you through the process, talk through your options and help ensure your plans continue to reflect what matters most to you.”
For many families, pensions represent decades of hard work, disciplined saving and hopes for future generations. Understanding how the rules are changing can help ensure more of your wealth reaches the people you care about.
HM Revenue & Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
Approved by The Openwork Partnership on 17/09/2026.