18 March 2026
“The Royal Assent of the Finance Bill confirms beyond doubt that inheritance tax on pensions is happening, with unused pension funds set to fall fully within the scope of inheritance tax from April 2027. This represents one of the most significant changes to pension taxation in a decade and fundamentally alters long‑standing estate planning strategies.
“We have consistently highlighted that the government’s current approach risks creating significant complexity and administrative burden for grieving families, who could face lengthy delays as personal representatives gather valuations, submit forms and settle IHT on pension assets alongside the rest of the estate. These proposals mean the process at death is likely to become more complex, with delays also anticipated in payments to non-exempt beneficiaries.
“With the direction of travel now firmly set, advisers must start reconsidering estate planning strategies, many of which will be fundamentally reshaped by the inclusion of pensions within the taxable estate. Most notably, options for mitigating IHT via pension preservation are narrowing, and advisers will need to revisit long‑held assumptions about the order in which clients draw down their assets.
“However, there are not many advice touchpoints with clients between now and April 2027, meaning advisers have a relatively short runway to support clients through what will be a major transition in tax treatment. Given the challenges ahead, it is vital that advisers play a proactive role in supporting families, helping them navigate the heightened administrative burden, anticipate possible delays in accessing funds and ensure estate plans are re-aligned well ahead of implementation.”
