Six-month countdown to the April 2027 Pension IHT shake-up

With just six months to go until major Inheritance Tax (IHT) changes come into force on 6 April 2027, we’re urging clients not to leave planning until the last minute.

From April, most unused pension funds and pension death benefits will be included when calculating IHT. In many cases, pension death benefits that currently sit outside an estate will instead form part of the IHT calculation, while personal representatives will also take on new responsibilities for reporting and paying any tax due.

Widely regarded as one of the most significant changes to retirement and estate planning in recent years, the reforms are prompting a seismic shift in wealth planning conversations. For families hoping to preserve and pass on wealth efficiently, the implications could be considerable.

The new rules mean pension and estate planning can no longer be viewed in isolation. Every family’s circumstances, objectives and legacy ambitions are different, making bespoke advice more valuable than ever.

Strategies such as establishing gifting plans, restructuring assets, reviewing pension drawdown or considering life insurance may all play a role in mitigating an IHT liability. However, these decisions require careful analysis, discussion and time to implement. Leaving planning until the final weeks before the changes take effect could limit the options available.

Periods of regulatory change often create opportunities for fraudsters. Experts fear criminals will exploit uncertainty by promoting schemes claiming to eliminate IHT through pension transfers or alternative investments. The most recent figures show more than £17m was lost to pension fraud across the UK in 2024 – equivalent to over £48,000 every day¹.

Mike Ambery, formerly Retirement and Savings Director at Standard Life and just appointed to direct Aviva’s wealth policy, has warned, “Scammers thrive on fear and uncertainty… As we move closer to the rule change, fraudsters are likely to prey on any confusion, perhaps presenting themselves as offering so-called ‘solutions’ such as moving pension savings into arrangements that claim to avoid Inheritance Tax altogether. Offers like these might sound reassuring, but they can put people’s retirements at serious risk.”

The changes have understandably raised questions, but reacting in haste can be just as damaging as doing nothing. Inheritance planning can be an emotive subject, yet protecting family wealth requires informed, considered decisions rather than rushed action. Seeking trusted financial advice now allows time to understand the options available, build an appropriate strategy and make decisions with confidence. Let’s talk it through.

¹Action Fraud

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority does not regulate Will writing, tax and trust advice and certain forms of estate planning. Gifting and trust strategies can have tax implications and may not be  suitable for everyone.