Starting April 2027, the UK will tax unused pension savings in inheritance tax, potentially raising rates to 87% for those over 75.

Starting April 2027, the UK will include unused defined contribution pension savings in inheritance tax (IHT) valuations, potentially subjecting thousands of estates to higher taxes, with combined rates up to 87% for those over 75. The change, part of broader HMRC reforms, could increase IHT receipts to £14 billion by 2030. Current IHT collections hit £4.4 billion in the first half of 2025, up from 2024, driven by a frozen nil-rate band, rising property values, and planned relief cuts. Employers are urged to prepare employees for the shift, while experts advise early pension spending and professional advice to mitigate tax exposure.