Inheritance Tax on Pensions Calculator (2027) Trending
Compare IHT before and after April 2027 when pensions enter the estate. See extra tax liability.
Last updated: April 2026 · Source: GOV.UK — Inheritance Tax on pensions consultation
Current Rules
£0.00
Pension outside estate
From April 2027
£120,000.00
Pension IN estate
Extra IHT from April 2027
+£120,000.00
Total estate: £800,000.00 (including £300,000.00 pension)
Key change from April 2027:
Pensions will be included in the estate for IHT. Currently pensions pass outside the estate (tax-free if you die before 75, or at beneficiary's marginal rate after 75). This is one of the biggest IHT changes in decades. Consider: lifetime gifting, spending pension first, whole-of-life insurance to cover the IHT bill.
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
From April 2027, unused pension funds will be included in a person's estate for Inheritance Tax purposes under proposed new rules. Currently, most defined contribution pension pots pass outside of IHT. The change means pension pots remaining at death will be added to the estate value when calculating whether IHT is due.
Where the combined estate including the pension pot exceeds the nil-rate band of £325,000 (plus the residence nil-rate band of £175,000 where applicable), IHT at 40% will apply to the excess. The pension scheme administrator will be responsible for paying the IHT due from the pension fund before distributing to beneficiaries.
This calculator models the potential IHT liability on your pension pot under the proposed rules. Enter your estimated estate value, pension pot size and intended beneficiaries to see the projected tax impact. Results are based on the consultation proposals and may change before the April 2027 implementation.
Example: £400,000 estate + £300,000 pension pot, home to children
- Total estate including pension: £700,000
- Less nil-rate band: −£325,000
- Less residence nil-rate band: −£175,000
- Taxable estate: £200,000
- IHT at 40%: £80,000 (of which pension fund pays a share)
Frequently Asked Questions
- What does the Inheritance Tax on Pensions Calculator (2027) do?
- Compare IHT before and after April 2027 when pensions enter the estate. See extra tax liability. All calculations are performed in your browser using official UK rates and thresholds.
- Is this calculator updated for the 2025/26 tax year?
- Yes. This calculator uses the latest HMRC rates and thresholds for the 2025/26 UK tax year, which runs from 6 April 2025 to 5 April 2026. Rates are verified against official HMRC publications.
- Do I need to tell HMRC about this?
- Whether you need to report to HMRC depends on your individual circumstances. If you are unsure, check GOV.UK or contact HMRC directly. This calculator provides estimates for guidance only.