Pension IHT 2027 Impact Calculator

Calculate how the April 2027 pension IHT change will affect your estate. Pension pots become subject to IHT from April 2027. Estimate exposure and plan now.

Pension IHT 2027 Impact Calculator

From April 2027, uncrystallised and drawdown pension funds will be included in an estate for IHT purposes. Calculate the potential impact on your estate plan.

Current Pension Pot Value (£) — uncrystallised/drawdown Other Estate Assets (£) Debts and Liabilities (£) Married/Civil Partner? (Spousal IHT exemption applies) Projected growth rate of pension (% per year) Years until expected death / planning horizon

Frequently Asked Questions

When do pensions become subject to IHT?

From 6 April 2027, uncrystallised pension funds (money not yet accessed) and drawdown funds (money in pension but not yet drawn) will be included in a person's estate for Inheritance Tax purposes. This was announced in the Autumn Budget 2024.

How are pensions currently treated for IHT?

Currently (before April 2027), pension funds generally fall outside the estate for IHT purposes because they are not owned by the individual — they belong to the pension scheme. Naming beneficiaries in an 'expression of wishes' means the pension passes IHT-free.

What types of pension will be affected?

Defined contribution pensions (personal pensions, SIPPs) in uncrystallised and drawdown phase. Final salary (defined benefit) death benefits may also be affected differently. Annuities (regular payments) are not included as there is no capital value.

What rate will pension funds be taxed at?

Pension funds will be included in the estate at full value and taxed at the standard IHT rate of 40% on the combined estate above the nil-rate band (and residential nil-rate band where applicable).

Is there any double taxation on pension withdrawals after 2027?

HMRC has proposed that beneficiaries will pay income tax when they draw down inherited pension funds, but the IHT should reduce any further income tax bill (a credit mechanism). The exact interaction is still being consulted on.

What can I do to mitigate the pension IHT change?

Options include: drawing down pension income during your lifetime and spending or investing it; making gifts from excess pension income; contributing to a pension for a spouse; considering whether annuitising some of your pot makes sense; writing a pension in trust structure where available.

Does the 2027 change affect spouse-to-spouse pension transfers?

Pension funds passing to a surviving spouse or civil partner may benefit from the spousal IHT exemption — but this only defers the problem. The pension will be taxable in the surviving spouse's estate on their death. Combined estate planning becomes critical.

What about pensions already in drawdown?

Yes, drawdown pensions (money crystallised but not yet withdrawn) will be included in the estate from April 2027. The pension administrator will be responsible for paying the IHT due on the pension portion before distributing to beneficiaries.