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A well-written Will is one of the most important things you can put in place for the people you care about. But even a Will that was right on the day you signed it can quietly fall out of step over time, as the law changes, your family changes, or what you own changes. One of the biggest changes in years is on its way, and it affects pensions specifically. Here's what's changing, what it means for you, and what's worth doing about it now.
What's actually changing
Right now, most private pensions sit outside your estate for inheritance tax purposes. That's made pensions one of the most tax-efficient ways to pass on wealth to the people you choose. From 6 April 2027, that changes: money left in a person's pension when they die will usually count as part of their estate for inheritance tax.
For a lot of families, this is a real shift. Pensions that were never expected to be touched by inheritance tax may now be, depending on the rest of what you leave behind.
Does this mean my Will isn't valid any more?
No. In almost all cases, your existing Will remains perfectly legally valid. The real question isn't whether it's valid, it's whether it's still doing what you want it to do: does it still achieve the outcome you had in mind, does it make good use of the allowances available to you, and does it still make sense now that your pension may be treated differently on death?
If you're not sure, that's exactly what a quick Will review is for - get in touch and we'll take a look together.
What this could mean for the tax bill
Inheritance tax is charged at 40% on anything above your available tax-free allowances. Those allowances aren't changing. What's changing is that pensions are being pulled into the calculation, which for many families means more of the estate sits above the tax-free threshold than before.
It's worth understanding why this matters more for pensions specifically than for other assets. If someone dies aged 75 or over, anyone who inherits their pension already pays income tax on the money as they draw it out. From April 2027, that same pension could also count towards the estate for inheritance tax. In effect, the same pot of money could be taxed twice over: once as inheritance tax on the estate, and again as income tax for whoever inherits it.
This is exactly the kind of situation good estate planning can soften. Gifting money or assets during your lifetime, sometimes called a "potentially exempt transfer", broadly, a gift that falls outside your estate for inheritance tax if you survive seven years after making it, is one of the main tools worth looking at. These things only work if there's time behind them, which is another reason to look at this sooner rather than later.
→ For more on this, see our guide: Six Practical Steps to Reduce Your Inheritance Tax Liability
Three things worth doing now
- Review your Will. We generally recommend reviewing a Will every three to five years in any case, and a change like this is exactly the moment that should bring that forward.
- Update your Expression of Wishes with your pension provider. This is separate from your Will, but just as important - it tells your pension provider who you'd like to benefit from your pension. Worth checking it still reflects what you actually want, especially in light of these changes.
- Look at your estate planning as a whole. If a pension makes up a meaningful part of what you'd leave behind, it's worth talking to us about wider estate planning, including lifetime gifting, to reduce how much of it is exposed to this double tax.
Not sure where to start? Our Private Client team can review your Will and Expression of Wishes together, so you know exactly where you stand - book a no-obligation call
Why it's worth sorting sooner rather than later
The detail of how and when any inheritance tax on a pension gets paid is still being finalised by HMRC, but early signs point to a process that takes time: valuing the pension, agreeing figures with the provider, and working out what's owed. Under the current rules, interest starts building on unpaid inheritance tax fairly soon after someone dies - so the sooner your family has clarity, the better placed they'll be to deal with it without unnecessary cost or stress.
A few common questions
Could my pension really be taxed twice?
Potentially, yes. If someone dies aged 75 or over, their beneficiaries already pay income tax on money they draw from an inherited pension. From April 2027, that pension may also count towards their estate for inheritance tax, on top of that income tax. It's one of the main reasons proper planning matters more than ever.
Do I need to change my Will right now?
Not necessarily - but if it's been a few years since you last looked at it, or your pension makes up a meaningful part of what you'd leave behind, now is a sensible time to check.
What if I don't have a Will at all yet?
Then this is a good moment to put one in place. Regardless of the pension changes, passing away without a Will means the law decides who inherits, not you.
Will reviewing my Will cost me a fortune?
We offer a fixed fee for Will reviews and updates, so you'll know exactly what it costs before we start. No surprises.
Talk to us
If you'd like to talk through what these changes mean for your own situation, including whether estate planning could reduce the tax bill, get in touch with our Private Client team.
Prefer not to call right away? Fill out the form and we'll be in touch.
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