This time next year a seismic reform to the retirement system takes effect.
From 6 April 2027, unused pension savings will enter the inheritance tax (IHT) net, a policy that’s already reshaping how people interact with their investment portfolios in later life.
The long and short is that leaving a pension pot to anyone who isn’t a spouse or civil partner will no longer attract IHT relief and could also create an administrative maelstrom. As IHT is applied at a rate of 40% on anything above the amount you can pass on tax free, and if you die after age 75 withdrawals are taxed at the beneficiary’s marginal rate, HMRC can take a large bite out of a loved one’s inheritance.
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