From 6 April 2027, unspent pension assets and certain death benefits are expected to be included in an individual’s estate for IHT purposes, introducing new requirements for how these benefits are valued, reported and taxed.
For wealth planners and paraplanners, these changes extend beyond a technical tax update. They will influence how pension assets are assessed, recorded and integrated into broader estate planning strategies.
Since the introduction of pension freedoms, discretionary pension arrangements have played a significant role in passing wealth between generations, largely because many death benefits were not subject to IHT.
That position is set to change. From 6 April 2027, most unused pension funds and related death benefits are expected to form part of the deceased’s estate for IHT purposes.
The government’s intention is to reduce the use of pension arrangements primarily as a means of transferring wealth across generations.