5 questions to answer before you withdraw a pension lump sum to reduce Inheritance Tax

From 6 April 2027, many unused pension pots will be included in Inheritance Tax (IHT) calculations.

Since the government announced the change in the 2024 Autumn Budget, an increasing number of people have opted to withdraw their tax-free lump sum from their pension as soon as they can.

Currently, you can access your pension from age 55 (rising to 57 from April 2028). According to MoneyWeek (9 April 2026), the number of 55-year-olds taking their lump sum reached a five-year high in 2024/25.

However, while many people may be hoping to reduce their pension’s IHT liability, taking funds early might not be as tax-efficient as you t