# What is the April 2027 pension Inheritance Tax change?

> Quick answer · Last updated 4 July 2026

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## In short

From 6 April 2027 most unused defined contribution pension funds will be included in your estate for Inheritance Tax at 40% above the nil-rate bands — ending the long-standing IHT advantage of leaving pensions untouched.

Today, most DC pensions sit outside the estate. Death before 75 can pass tax-free to beneficiaries; death after 75 means beneficiaries pay Income Tax on withdrawals, not IHT on the pot itself.

From April 2027 the value of unused DC funds (and most lump-sum death benefits) is expected to form part of the estate for IHT. Spouse and civil partner transfers should still qualify for the spouse exemption; children and other beneficiaries may face IHT plus Income Tax on post-75 deaths.

Many retirees are revisiting drawdown speed, lifetime gifting and whole-of-life policies written in trust. See our full April 2027 pension IHT guide and Inheritance Tax calculator.

## Related

- [April 2027 pension IHT change](https://moneyguide.org.uk/pensions/april-2027-pension-iht/)
- [Inheritance Tax calculator](https://moneyguide.org.uk/tools/inheritance-tax-calculator/)
- [Pension death benefits](https://moneyguide.org.uk/pensions/pension-death-benefits/)

## Primary source

gov.uk/government/consultations/inheritance-tax-on-pensions-liability-reporting-and-payment

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.