Legal News | 14.05.26
Pause for thought: inheritance tax on pensions
From April 2027, the inheritance tax (“IHT”) treatment of pensions will significantly change with most unused pension funds and pension death benefits being brought within the taxable value of a deceased person’s estate. The changes will require personal representatives to identify pension schemes, obtain valuations and account for any IHT due.
The changes have led many clients to reassess their retirement savings and succession planning. According to Standard Life’s latest research, one in five feels less confident about pensions as a result and, as many individuals remain unclear about how the reforms will affect them, scammers are using this uncertainty as an opportunity to exploit confusion. Fear, urgency, and the promise of a simple “solution” to a complex tax issue can lead to rushed and ill-informed decisions.
With less than a year to go until the changes are implemented, retirement savers should be alive to the risks of unsolicited approaches by individuals wishing to discuss their pension pots. The key message is one of caution. Individuals should take measured and sensible steps, seeking advice from legitimate financial advisers and legal professionals where necessary. Whilst the reforms themselves are real, a greater danger lies in reacting to them hastily.
At Wansbroughs, we continue to monitor how developments will impact individuals and personal representatives alike, including HM Revenue and Customs’ technical note published only this week. If you are currently considering your own estate planning and the effects that the April 2027 changes will mean for your estate, our Private Client team at Wansbroughs is here to help.
