Pension inheritance tax calculator (UK)
From 6 April 2027, most unused pension funds count toward your estate for Inheritance Tax. See the difference this makes to your estate's IHT bill.
Doubles both allowances below — the standard position for the second death in a marriage/civil partnership where none of the first estate's allowance was used.
Change to your estate's IHT bill from April 2027
£20,000
Before April 2027
Estate value
£400,000
IHT due
£0
From April 2027
Estate value
£550,000
IHT due
£20,000
Nil-rate band
£325,000
Residence nil-rate band
£175,000
This is a simplified, estate-at-a-point-in-time estimate using 2026/27 nil-rate band figures (frozen to April 2030). It doesn't account for gifts made in the 7 years before death, business or agricultural relief, trusts, or other estate planning that can significantly change the actual amount due. Inheritance Tax planning is genuinely complex — please treat this as a starting point for a conversation with a qualified financial adviser or solicitor, not a final figure.
What's changing, and why it matters
Pensions have historically sat outside a person's estate for Inheritance Tax purposes, making them a popular way to pass on wealth largely tax-free — you could spend down other savings first and leave the pension untouched for beneficiaries. From 6 April 2027, most unused defined- contribution pension funds and death benefits will instead count as part of the estate, taxed at the standard 40% above the available nil-rate bands, the same as any other asset.
Two important carve-outs remain: death-in-service benefits (a payout from an employer's scheme if you die while employed) stay outside the estate, and a pension passing to a surviving spouse, civil partner, or registered charity stays exempt — the same exemption that already applies to other assets left to a spouse or charity.
From 6 April 2027, it's the personal representatives (executors) who become responsible for reporting and paying any Inheritance Tax due on the pension — not the pension scheme administrator, which adds a genuine administrative step to estate settlement that didn't exist before.