22/07/2026
From 6th April 2027 the value of your invested pension pots will form part of your estate for Inheritance Tax purposes.
The first step is understanding what your IHT liability is likely to be once your Pensions have been added to your estate. You can then consider the options available to reduce this.
Everyone has a £325,000 IHT allowance, married couples can pass their allowance on death to their spouse. There is also an additional £175,000 main residence allowance per person if you are passing your home to your children or step children. This is also allowed to be passed to a spouse on death. Therefore the total allowance on second death for a married couple is £1 million. However it's not that straightforward as your main residence allowance will reduce if your estate is valued at over £2 million.
*This excludes defined benefit/ final salary pensions
