It was announced in the Autumn Budget that pension pots will be subject to inheritance tax from 2027.  As pensions are not currently seen as part of an individual's estate, and so are exempt from inheritance tax (IHT), the announcement by Chancellor Rachel Reeves has huge implications. 

Karen Barrett, Chief Executive and Founder of Unbiased, comments on how bringing pensions under inheritance tax is likely to prompt a huge rethink in financial planning:

By subjecting pensions to inheritance tax, those who have worked hard to build up their pension for a comfortable retirement could leave their beneficiaries with a hefty tax bill.

While IHT won’t apply until 2027, it could impact how people access their pension and their whole approach to their retirement – especially if they’ve planned based on the current rules.

For example, retirees often access their pensions last due to its exemption from IHT – but from 2027, doing the opposite could become more popular so loved ones don’t get hit with a steep tax bill.

If your estate planning is based on the current IHT rules, it’s a good idea to review this and consider making changes with the help of a financial adviser.

Full press release: Bringing pensions under inheritance tax likely to prompt a huge rethink in financial planning

✉️ Lisa-Marie Voneshen, Senior Content Writer, Unbiased on 01212856986 / lisamarie.voneshen@unbiased.com