Pension Changes 2027

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UK PENSIONS / 2026–2030

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Inheritance tax on a pension

Explore a simplified illustration for deaths on or after 6 April 2027. This compares total estate Inheritance Tax; it does not calculate beneficiary Income Tax or net inheritance.

Enter 0 if the residence allowance does not apply. Use only the qualifying share passing to direct descendants. Include it in the estate value above, net of debts.

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Enter the values and calculate.

Assumptions

Uses one £325,000 nil-rate band, a maximum £175,000 residence band reduced by £1 per £2 above a £2 million estate, then capped by the qualifying home value, and a 40% rate. No transferred allowances, lifetime gifts, debts adjustments, charitable relief, other exemptions or beneficiary income tax are modelled. Estate inputs should already account for debts.

The spouse setting exempts the pension only. Other estate assets are assumed taxable. The pension can still affect residence-band tapering; the result therefore shows additional estate tax, not the pension’s legally allocated tax bill. Assumes spouse exemption is fully available; cross-border cases need specialist review.

Figures: 2026/27, checked 7 October 2026. Results are illustrative, not advice.

Sources: GOV.UK inheritance tax · Residence nil-rate band · HMRC taper calculation · Pensions technical note.