A new survey reveals that over a third of over-55s are unaware that unused pension pots could be taxed as inheritance from April 2027, highlighting the need for better estate planning and open family discussions.
More than a third of people aged over 55 do not know that unused pension pots could fall within Inheritance Tax from April 2027, according to new research that also suggests many families still avoid talking about what happens to their wealth after death.
A YouGov survey commissioned by wealth manager Mattioli Woods found that only 35% of over-55s were aware that unused pension funds could be brought into the Inheritance Tax net from 6 April 2027. The change was announced by the government in last year’s Autumn Budget and is still subject to consultation, but it is already set to reshape estate planning for many savers.
The findings point to a broader gap in understanding of the tax system. Just 15% of respondents said they understood the main Inheritance Tax allowances, including the nil rate band and residence nil rate band, despite their importance in determining whether an estate faces a bill. By contrast, awareness was stronger on some basic planning tools: 83% recognised the importance of having a valid will, while 61% said they knew about the seven-year gifting rule.
The research also suggests that inheritance remains a sensitive subject in many households. Across the UK, a quarter of over-55s said they had never discussed inheritance openly with their family. In Scotland, that figure rose to 36%, while London recorded the highest level of avoidance at 44%.
Amit Joshi, managing director of wealth at Mattioli Woods, said the results showed a disconnect between people’s expectations of passing on wealth and their understanding of the rules that govern it. He said families should raise the issue before it becomes urgent, adding that delayed conversations can lead to confusion, disputes and avoidable hold-ups in administering estates.
The planned changes, first outlined by the government, are expected to bring most unused pension funds and death benefits into the estate for Inheritance Tax purposes from 6 April 2027. According to specialist tax advisers, that could mean some beneficiaries face both Inheritance Tax and income tax on pension money, depending on how it is passed on and withdrawn.
Advisers say the reforms make it more important for savers to review wills, expression of wishes forms and broader estate plans. They also note that, under the new system, personal representatives are likely to play a much larger role in dealing with pension assets after death, including settling any tax due.
- https://www.dailyrecord.co.uk/lifestyle/money/inheritance-tax-rule-changes-april-37361142 – Please view link – unable to able to access data
- https://www.mha.co.uk/insights/inheritance-tax-pensions-changes-april-2027 – This article discusses the UK government’s announcement that, from 6 April 2027, most unused pension funds will be included in a deceased person’s estate for inheritance tax (IHT) purposes. The change aims to encourage individuals to draw down on their pensions during retirement rather than using them as a means of wealth transfer. The article also addresses the complexities of how IHT will be paid, noting that personal representatives will be responsible for remitting the IHT on unused pensions along with the rest of the estate. Additionally, it highlights the potential for double taxation, as unused funds may be subject to both IHT and income tax when distributed to beneficiaries.
- https://retirementexpert.co.uk/retirement-tax/inheritance-tax-pensions – This guide explains the significant changes to inheritance tax (IHT) on pensions set to take effect from 6 April 2027. It outlines how unused defined contribution pension pots will be included in a deceased person’s estate for IHT purposes, marking the biggest UK retirement tax change in a decade. The article provides a detailed comparison of the current and new rules, including the impact on nil-rate bands and exemptions. It also offers practical advice on how individuals can plan for these changes to mitigate potential IHT liabilities.
- https://news.sky.com/story/hmrc-releases-new-details-on-inheritance-tax-changes-for-pensions-13552586 – This news article reports on HMRC’s release of new details regarding inheritance tax (IHT) changes for pensions, effective from 6 April 2027. The government announced that most unused pension funds and pension death benefits will be brought within the value of a deceased person’s estate for IHT purposes. The article highlights the shift from current legislation, which does not consider most pension funds for IHT, and discusses the implications of this change for individuals and their estate planning.
- https://www.afterloss.uk/guides/pensions-inheritance-tax-2027 – This practical UK guide provides an overview of the pension inheritance tax changes from April 2027. It covers what is changing, who is affected, exemptions, and what individuals should do now. The guide explains that from 6 April 2027, unused defined contribution pension funds will be counted for inheritance tax (IHT) purposes, affecting anyone with a defined contribution (DC) pension considering what happens to that money when they die. It also offers advice on how to prepare for these changes, including checking expression of wishes forms with pension providers.
- https://www.ajbell.co.uk/pensions/inheritance-tax – This article discusses the upcoming changes to inheritance tax (IHT) on pensions, effective from April 2027. It explains that, currently, most pensions are not subject to IHT but may face income tax when used by the beneficiary. The article outlines how personal representatives will handle IHT payments from the estate and notes that unused pensions and death benefits will be included in the estate value unless left to a spouse or civil partner. It also mentions that personal representatives can ask pension schemes to pay IHT directly to the government.
- https://www.which.co.uk/money/pensions-and-retirement/accessing-your-pensions/will-my-pension-be-subject-to-inheritance-tax-aYugS5j0MX2J – This article from Which? explains the current and upcoming rules regarding pensions and inheritance tax (IHT). It states that, under current rules, money held in pensions is exempt from IHT. However, from April 2027, pensions will no longer be exempt from IHT, meaning that inheritance tax may have to be paid on pensions when an individual dies. The article provides information on how IHT works, what happens to pensions upon death, and how individuals can plan to mitigate potential IHT liabilities.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
7
Notes:
The article references a YouGov survey commissioned by Mattioli Woods, indicating recent research. However, the specific publication date of the survey is not provided, making it challenging to assess the freshness of the data. The article also discusses government plans announced in the 2024 Autumn Budget, with changes set for April 2027. While the policy change is recent, the article’s content may be based on earlier information, potentially affecting its freshness.
Quotes check
Score:
6
Notes:
The article includes direct quotes from Amit Joshi, managing director of wealth at Mattioli Woods. However, without access to the original source of these quotes, it’s difficult to verify their authenticity. The lack of verifiable sources for these quotes raises concerns about their accuracy and originality.
Source reliability
Score:
5
Notes:
The article originates from the Daily Record, a regional newspaper in Scotland. While it is a known publication, its reach and influence are more limited compared to major national news organisations. Additionally, the article appears to be summarising or aggregating content from other sources, including government publications and financial advisory firms, which may affect its independence and reliability.
Plausibility check
Score:
8
Notes:
The article discusses the government’s plan to include unused pension funds within the scope of inheritance tax from April 2027, a policy change announced in the 2024 Autumn Budget. This aligns with information from official government publications and reputable financial advisory firms. However, the article’s reliance on a single, unverified survey introduces some uncertainty regarding the breadth and accuracy of the data presented.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article discusses the government’s plan to include unused pension funds within the scope of inheritance tax from April 2027, a policy change announced in the 2024 Autumn Budget. However, the article’s reliance on a single, unverified survey commissioned by Mattioli Woods, a wealth management firm, raises concerns about the independence and reliability of the data presented. Additionally, the lack of verifiable sources for direct quotes and the potential summarisation of content from other sources further undermine the article’s credibility. Given these issues, the article does not meet the necessary standards for publication under our editorial indemnity.