Home / Pensions & Inheritance Tax 2027
Pillar guide · Updated July 2026
Pensions and inheritance tax from April 2027
The most significant change to pension and estate planning in a generation. This is your complete guide to what is changing, when, and the decisions worth reviewing now.
The three changes that matter
- Pensions enter the estate (6 April 2027). Unused defined contribution pension funds become part of your estate for inheritance tax, having previously sat outside it.
- Business & Agricultural Relief capped (6 April 2026). 100% relief is limited to £1 million per person; 50% relief applies above that.
- Allowances frozen to 2030. The £325,000 nil-rate band and £175,000 residence nil-rate band are frozen, pulling more estates into IHT each year.
Start here
The rule changes explained
Estate & inheritance tax
Estate planning in the new regime
Common questions
Pensions & IHT 2027: frequently asked questions
When do pensions become subject to inheritance tax?
From 6 April 2027, most unused defined contribution pension funds are brought within your estate for inheritance tax for the first time, ending their status as an IHT-exempt way to pass on wealth.
Are the nil-rate bands changing?
No. The £325,000 nil-rate band and £175,000 residence nil-rate band are unchanged in cash terms, but frozen until April 2030, so more estates are drawn into inheritance tax each year through fiscal drag.
What is changing to Business Relief?
From 6 April 2026, 100% Business Relief and Agricultural Relief is capped at £1 million of qualifying assets per person. Assets above the cap receive 50% relief, an effective 20% inheritance tax rate on the excess.
Does the spousal exemption still apply to pensions?
Yes. Pensions passing to a surviving spouse or civil partner remain exempt from inheritance tax. They then form part of the survivor's estate, which makes second-death planning particularly important.
The first conversation is free
Talk through what April 2027 means for you
Peter Rose and the Aetas Wealth team advise families and business owners on pension and inheritance tax planning ahead of the changes. A first conversation costs nothing and commits you to nothing.
Book a conversation →This guide is for general information and does not constitute personal advice. Tax treatment depends on individual circumstances and may change. The Financial Conduct Authority does not regulate Wills, Trusts, Tax advice or Cash Flow Planning. The value of investments can fall as well as rise.