Re-thinking the order of estate planning from April 2027

Now that pensions are included in estates for inheritance tax (IHT), more clients will need to review or create estate plans. (Source Money Marketing)

From 6 April 2027, pensions will be included in an individual’s estate for inheritance tax (IHT) purposes, marking a major change in estate planning strategy.

Previously, pensions offered a tax-efficient way to pass on wealth, encouraging clients to preserve them and draw down other assets first. But with this IHT advantage ending, the long-standing guidance to “touch pensions last” may no longer hold, particularly for clients in decumulation.

For those still in the accumulation phase, typically in their 30s to 50s, pensions continue to offer value through upfront income tax relief and retirement income planning. However, advisers will need to reassess how clients build and preserve wealth over the long term, as estate planning becomes a more prominent part of early financial strategy.

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