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.
Netted off the estate before Inheritance Tax is worked out — the figures above are gross, before debts.
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.
Rates verified against gov.uk — Pensions and Inheritance Tax reform in August 2026.
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.