Changes to inheritance tax on pensions from 6th April 2027

The government has confirmed that changes to the inheritance tax treatment of pensions will take effect from 6th April 2027.

Under the new rules, unused pension pots and certain pension death benefits will be included within a deceased person’s estate for inheritance tax purposes.

This changes the current position where pensions are commonly treated outside the scope of inheritance tax calculations.

Inheritance tax is currently charged at 40% on estates above the applicable thresholds and allowances. From April 2027, pension assets will form part of the estate valuation when calculating inheritance tax liability.

HMRC has also released guidance outlining the reporting and administrative requirements linked to the changes.

From 6th April 2027, executors and personal representatives will be required to:

• Identify pension arrangements held by the deceased
• Obtain date-of-death valuations from pension providers
• Report pension information to HMRC
• Include relevant pension assets within inheritance tax reporting processes

HMRC has confirmed that a new online reporting system will be introduced as part of the updated process.

The changes form part of the government’s wider inheritance tax and pension reporting reforms and will apply from the start of the 2027/28 tax year.

Get in touch for support

For further information on inheritance tax planning, estate administration, and upcoming tax changes, contact the team at Verallo.