Changes to Inheritance Tax from April 2027

Inheritance Tax (IHT) may be due if the value of someone’s estate (their money, property and possessions) is more than the IHT threshold (currently £325,000) when they die. Anything left to a spouse, civil partner or charity is usually exempt from IHT.

At the moment, pensions don’t normally count towards the value of an estate – but that is changing.

From 6 April 2027, some unused pension funds and certain death benefits will be included. This may affect:

• Pension pots or drawdown funds still unspent
• Most lump sum death benefits

But it will not usually include:

• Defined Benefit spouse pensions – the Cadent Gas Pension Scheme is a Defined Benefit scheme (Dependants’ pensions will also be excluded)
• Lifetime annuities – dependants’ pensions and the joint life (survivor’s) part of the annuity will also be excluded
• Death in service benefits

Additionally, from April 2027, Personal Representatives will be able to ask pension schemes to hold back up to 50% of taxable pension benefits if they believe IHT may be due. They’ll then have 15 months to confirm whether the scheme should pay the tax directly to His Majesty’s Revenue and Customs (HMRC).

You can find more information on IHT at www.gov.uk/inheritance-tax

We are not tax specialists, so if you have any questions about tax, contact HMRC, an adviser or a tax specialist.

Please note: tax rules can change. This article was correct as at 24 August 2026.