For many years, people have taken comfort in the idea that their pension usually sits outside their estate for inheritance tax purposes. It has been a quiet reassurance that whatever happens, the pension pot would normally pass on without adding to the tax bill. From April 2027 that picture may begin to change and it is likely to catch people by surprise.
- The rules on pension death benefits are shifting
The government has confirmed that the current treatment of pension death benefits is changing. From April 2027 certain pension pots may be brought back into the estate for inheritance tax calculations. This represents a significant shift because many families have planned around the long standing assumption that pensions remain outside the estate. The detail is still developing but the direction of travel is clear.
- The impact may be greater than people expect
For some families the pension is one of the largest assets they hold. Bringing it into the estate could increase the overall value of the estate and potentially push it above the available allowances. This may also influence how beneficiaries receive pension benefits and how those benefits are taxed.
- Awareness of the change is still low
Because the change does not take effect until April 2027 it has not yet received much attention. Many people still assume that pensions will always sit outside the estate and may not realise that the rules are evolving. This creates a hidden risk where families only discover the implications much later when options are more limited.
Final thought
The treatment of pensions on death has been stable for a long time which is why this change is likely to catch people by surprise. Speaking to professionals sooner rather than later can help people understand how the rules may affect their own situation. A combined approach that brings together both legal and financial expertise often provides the clearest picture, especially where pensions, estates and inheritance tax all interact. It ensures that the right questions are asked and that nothing important is overlooked as the rules continue to evolve.
Published on: 26.06.2026
Contact: Daniel Sperber at Coleshill Wealth Management
T: 01675 622 445
E: daniel@coleshillwealthmanagement.co.uk
The information contained in this blog is for information purposes only and does not constitute advice. Please seek financial advice before making any decisions. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is not a guide to future returns.