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Inheritance tax and pensions ― proposed changes from 6 April 2027


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
tag-icon Autumn Budget 2024

Inheritance tax and pensions ― proposed changes from 6 April 2027


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
tag-icon Autumn Budget 2024
imgtext

This guidance note details the proposed changes to the taxation of pensions from 6 April 2027. These proposed changes will be a major change in how pensions are dealt with for IHT, bringing unused pension funds and death benefits into the Inheritance Tax net. In addition, pension scheme administrators will become liable for reporting and paying any inheritance tax due on unused pension funds and death benefits.

Current position

The current position is set out in the Inheritance tax treatment of pensions on death (before 6 April 2027) and IHT relief for pensions guidance notes. Broadly, death benefits and unused pension funds from discretionary schemes are not chargeable to inheritance tax. Death benefits from non-discretionary schemes are chargeable to IHT and this is due by the personal representatives.

However, HMRC has noted that since the changes to pension taxation over the last decade, pension schemes have been increasingly used and marketed as a tax planning tool to transfer wealth without an IHT charge, rather than for

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  • 06 Nov 2024 12:01

Home/ Tolley Tax Guidance/ Trusts and Inheritance Tax / Understanding the key concepts of IHT

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