01
More funds in the estate
For deaths from 6 April 2027, most unused pension funds and pension death benefits will be treated as part of the estate for Inheritance Tax.
Finance Act 2026
CHARLES MOODY: CHARTERED FINANCIAL PLANNER
When your pension becomes part of your estate.
From 6 April 2027, most unused pension funds and death benefits will fall into your estate for Inheritance Tax. Our jargon-free guide explains what changes and what to review.
Educational information, not personal advice. Tax rules can change and individual circumstances vary. FCA Number: 1002893
Oculus2027
The IHT &
Pension Guide
Pension Guide
A practical planning checklist
Effective from
6 April 2027
6 April 2027
Who it affects
This change matters if…
- You hold a SIPP, personal pension or defined contribution workplace pension
- Your pension is likely to have value remaining when you die
- You planned to pass your pension to children or other beneficiaries
- Your combined estate of property, savings, investments and pensions is above the IHT allowances
6 Apr 2027
The date unused pension funds enter your taxable estate
40%
Standard Inheritance Tax rate above the available allowances
£325,000
Nil rate band per person, unchanged since 2009 and frozen to 2030
£500,000
Potential IHT free allowance per person when the residence nil rate band applies
Up to 67%
Possible combined effective rate where IHT and beneficiary income tax both apply after 75
£2m
Estate level at which the residence nil-rate band begins to taper away
What changes
A shift in how pensions are taxed at death.
02
Who reports and pays
Personal representatives will report and pay any IHT due on pension benefits, alongside their responsibilities for the wider estate.
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Important exclusions
Death in service benefits from registered schemes and certain dependant scheme pensions are excluded from the new treatment.
Source: HMRC technical note on Inheritance Tax and pensions.
Your working guide
The Pension IHT Checklist
This guide is for information only and does not constitute personal financial advice. The Financial Conduct Authority does not regulate taxation advice.
Checklist progress0 of 19
01
Part One
Understand your exposure
Tick each statement that applies. Your answers will help frame a more informed conversation about your estate.
02
Part Two
Planning actions before April 2027
Work through these practical information gathering steps. Personal recommendations should come from qualified advisers.
03
Part Three
Additional checks for couples and families
Family circumstances can change the outcome. These prompts help surface details that may need tailored advice.
Questions
Common questions
Does this apply to every pension?
No. Most unused pension funds and death benefits are in scope, but death in service benefits from registered schemes and certain dependant scheme pensions are excluded.
Who will be responsible for the tax?
Personal representatives will report and pay any IHT due. Where tax may be due, they can ask a pension scheme to withhold up to 50% of taxable benefits for up to 15 months.
When do the new rules start?
They apply to deaths occurring on or after 6 April 2027. Reviewing arrangements in advance can help families and executors understand the likely position.
Is the guide personal advice?
No. It is educational information. Tax treatment depends on individual circumstances and may change, so take personalised advice before acting.
Your adviser
Led by Charles Moody, Chartered Financial Planner.
Oculus Wealth Management (Westminster) Ltd is an appointed representative of Oculus Wealth Management, providing financial planning and wealth management to private clients and their families.
Chartered status
Chartered Financial Planner
Charles has been a Chartered Financial Planner and Fellow of the Personal Finance Society since 2014, holding the profession’s highest qualification.
Experience
Advising clients since 2006
He specialises in estate planning, retirement solutions and tax-efficient investment planning for business owners and City professionals.
Credentials
MCSI · Level 6
A member of the CISI holding the level 6 MCSI designation, Charles delivers holistic advice alongside discretionary fund managers, accountants and solicitors.
Oculus Wealth Management is a trading style of Oculus Wealth Management (Westminster) Ltd which is an appointed representative of Oculus Wealth Management Ltd, 2 Grove Park Court, Harrogate, HG1 4DP, a company authorised and regulated by the Financial Conduct Authority. Company number 15140318
Your next step
Talk through what the changes mean for your family.
An Oculus adviser can review your pensions and wider estate, explain where the new rules may affect you, and help you decide whether any action is appropriate.
A conversation does not commit you to making changes.