Explained: Why your pension could become liable for Inheritance Tax

Next year, a significant change to how pensions are treated when calculating Inheritance Tax (IHT) could mean more families become liable for the tax. Here’s what you need to know to understand if your estate could be affected and how you might mitigate a potential bill.

Currently, pensions are usually outside your estate for IHT purposes. As a result, your pension might provide a tax-efficient way to pass on wealth to your loved ones.

This will change on 6 April 2027, when most unused pension funds and pension death benefits will be included in IHT calculations.

According to HMRC