12/04/2025
šØ UK Pension Alert: Starting April 2027, unused pension funds and death benefits will be included in your estate for Inheritance Tax (IHT), as per the 2024 Autumn Budget. This means your pension could face a 40% IHT charge if your estate exceeds the Ā£325,000 nil-rate band (or Ā£500,000 if passing your home to direct descendants). š°
For example, if you take your 25% tax-free lump sumāsay Ā£175,000 from a Ā£700,000 pensionāand leave the rest untouched, that remaining Ā£525,000 will now be part of your estate for IHT. If your total estate (including other assets like a Ā£800,000 home) hits Ā£1,325,000, your IHT bill could jump from Ā£190,000 to Ā£400,000 under the new rules [Web ID: 1]. While only 8% of estates are expected to pay IHT, those near or above the threshold need to act [Web ID: 4].
A financial advisor can help by:
ā¢ Reviewing whether taking your 25% tax-free lump sum now makes sense for your estate plan.
ā¢ Exploring strategies like gifting, trusts, or adjusting pension withdrawals to minimize IHT.
ā¢ Ensuring your beneficiaries are set up tax-efficiently.
My Retirement Planning can connect you with a financial advisor for a free initial consultation to review your pension and estate plan. š Visit www.myretirementplanning.co.uk to secure your financial future!
