For most of the last decade, a pension was the one thing you could pass on without it being taxed as part of your estate. That ends on 6 April 2027. Below you can see what your family would pay today, and what they'd pay after the change.
Three questions, then your own figures. Nothing is sent anywhere — this runs in your browser.
This is the part most people get wrong. A pot with a balance is the kind that gets caught, because there's money left over that someone inherits.
Figures are for the second death, when the tax actually falls. Enter your combined estate and combined pensions.
Same estate, same pension, same family. The only thing that's different is the date.
General information, not personalised advice. Based on the law as enacted in the Finance Act 2026 and the position announced at the Budget of 28 October 2026. Assumes the nil-rate band at £325,000 and the residence nil-rate band at £175,000, both frozen to April 2031, and 40% on the excess. Widowed and married figures assume a late or first-to-die spouse's allowances transfer in full — if any was used on the first death, yours will be lower. The residence nil-rate band assumes you own a home worth at least the allowance and leave it to direct descendants. Business and agricultural relief, trusts, gifts in the last seven years, and charitable giving are not modelled. Your own position may differ.
Inheritance tax is only the first bite. Once your children take the money out of the pension, they may pay income tax on it too — at their rate, on top of the inheritance tax already paid.
Whether that second bite happens turns almost entirely on one thing: how old you are when you die.
Assumes the whole pot bears inheritance tax at 40% — which is the case once an estate is above its allowances. Assumes the beneficiary correctly claims the deduction for inheritance tax already paid (see below), and that drawing the money doesn't push them into a higher band. Rates shown are for England, Wales and Northern Ireland; Scottish rates differ and the top rate is slightly worse. A pension passing to a husband, wife or civil partner carries no inheritance tax at all.
There is a protection in the legislation, and it's the reason the numbers above aren't even worse. Your children get to deduct the inheritance tax already paid before their income tax is worked out — so the income tax falls on what's left after inheritance tax, not on the whole pot.
Without it, a higher-rate child would be looking at a bill closer to 80%. With it, they keep more than a third.
But it isn't automatic. Depending on how the tax gets paid, the beneficiary may have to know the relief exists, work out how much inheritance tax was attributable to the pension, and take it up with HMRC themselves. Someone who doesn't know to claim it pays sixteen pence in the pound more than someone who does, at higher rate — eight pence at basic rate, eighteen at additional.
That is exactly the sort of thing nobody tells an executor, and exactly why writing it down in advance matters.
This is where nearly all the confusion sits, and it matters, because for some people this change does nothing at all. The dividing line isn't really about the word "pension". It's about whether there's something left over on your death that somebody else receives.
If you can log in and see a number, that number joins your estate. This is the great majority of people affected.
If your pension is a promise of income based on your salary and service — NHS, teachers, local government, armed forces, most older company schemes — the widow's or widower's pension that continues after your death is not caught. There's no pot to inherit, so there's nothing to tax.
Two things to watch, though. Many of these schemes also pay a lump sum on death, and a lump sum is counted. And the survivor's pension is only outside the charge where that genuinely is the only form the benefit can take — if your scheme would let the beneficiary take a pot or an annuity instead, the exclusion may not apply.
A plain annuity that simply stops when you die has nothing left to pass on, so there's nothing to count.
But two common add-ons are counted. A guarantee period — where payments carry on for, say, ten years whether you live or not — is valued and brought in if you die inside it. So is value protection, which returns part of your original pot on death. A joint-life annuity bought at the same time as your own, continuing to a spouse or partner, is specifically left out.
If you hold an annuity, dig out the paperwork and find out which of these you have. It's the single most common place people get this wrong in either direction.
A lump sum paid because you died while still employed is specifically excluded. The exclusion turns on you being in work at the time — so a lump sum paid on the death of someone who had already left that employment and was a deferred member generally is counted.
The spouse exemption applies, so there's no tax when a pension passes to a husband, wife or civil partner. But it doesn't disappear — it sits in their estate instead, and is taxed on the second death. That's why the calculator above asks about the second death rather than the first.
There's also a sting that catches people out. The £2m threshold at which the residence allowance starts being withdrawn is tested on the whole estate, before exemptions are applied. So a pension going tax-free to a spouse can still quietly cost the family part of that allowance.
A few edges of this remain genuinely unsettled — HMRC hasn't yet put a clear position in writing on everything, particularly around certain older policies and exactly how discretionary lump sums will be valued. Where that's the case, the briefing says so rather than guessing.
The change inverts advice that was good for ten years. The old rule of thumb was to spend your other savings first and leave the pension untouched, because it passed on free of inheritance tax. From April 2027 that's backwards: the pension becomes the taxed asset, and in a lot of cases the most heavily taxed thing you own.
Which opens up a question most people haven't had to think about. If the pension is going to be taxed at 40% whether you touch it or not, is leaving it alone still the right thing to do?
There's no single answer, and it turns on your income, your health and what you want the money for. But one route matters more than it used to: income you draw and then give away out of surplus leaves your estate immediately and isn't taxed at all, under an exemption that has been in the law since 1984 and wasn't touched by any of this. It's the main reason this change and our first product sit on the same website.
From 6 April 2027, yes. A SIPP is a defined contribution pension like any other, and unused funds left in it on death count towards the estate for inheritance tax. Before that date most unused pension funds sat outside the estate, which is why so much of the advice still in circulation says the opposite.
It matters a great deal, but for income tax rather than inheritance tax. Die before 75 and whoever inherits the pot normally takes it free of income tax. Die at 75 or over and they pay income tax on what they draw, at their own rate. From April 2027 inheritance tax applies either way, on top.
So the worst case is dying at 75 or over with a taxable estate: inheritance tax on the pot, then income tax on what's left of it. There is relief that stops the two stacking to the full amount — the beneficiary can take the inheritance tax off before the income tax is worked out — but the combined bite is still large.
Two separate taxes, in order. Inheritance tax on the estate first, at 40% on anything above the available allowances. Then, if you were 75 or over when you died, income tax at the beneficiary's own marginal rate on what they take out. A basic rate taxpayer and a higher rate taxpayer inheriting the same pot end up with very different amounts.
Unused drawdown funds are caught in the same way. Having crystallised the pot, or taken the tax-free cash from it, does not put what's left outside the estate from April 2027.
Anything left to a spouse or civil partner is exempt from inheritance tax, as it always has been. The catch is that it isn't a solution, only a delay: the pot joins their estate, and the bill lands on the second death instead — usually when it reaches the children.
No. The state pension isn't a pot of money you own, so there's nothing to bring into an estate. Separate rules let a widow or widower inherit part of a late spouse's state pension in some circumstances, which is a different question with a different answer.
Not by any arrangement that makes the pot itself invisible — from 6 April 2027 unused funds count as part of the estate, and that is the end of the matter. What is still open is how much of the pot is left sitting there when you die. Income you draw and then give away out of genuine surplus leaves your estate straight away and isn't taxed at all, under the normal expenditure out of income exemption. Gifts out of capital work differently and carry a seven-year clock. Spending it is the other obvious answer and the one most people dismiss too quickly. Which of those makes sense turns on your income, your health and what you want the money for, so this is general information rather than advice about your own position.
From 6 April 2027, money left in a pension when you die is counted as part of your estate for inheritance tax. Before that date it sits outside the estate entirely. Nothing else about pensions changes — the age-75 rule still decides what income tax your beneficiary pays, and the allowances are the same. It is one change, and it is the one that matters.
HMRC is expected to publish its final guidance on how all of this is reported and paid before April 2027. Where that guidance changes anything on this page, this page gets changed.
The figures above are a sketch. The estate check asks six questions — what the estate is worth, whether there's a surviving spouse, whether a home is passing to children, and what the pensions are worth — and gives you the real number, with every allowance shown in money rather than percentages.
It takes about two minutes, it's free, and there's nothing to sign up for.
Nothing you type is sent anywhere. It works out the answer on your own device.
Two products, both built from ten years of sitting at kitchen tables with families sorting out an estate after the fact.
The Gifting Kit — everything you need to give money away out of surplus income and leave your executors a record HMRC will accept. The exemption this page mentions, done properly. See what's in it →
The Executor Kit — the record your family will need and the guide your executors will read. The Inheritance Tax Edition at £129 includes a calculator that applies the rules in force on the date of death, the Pensions Guide, letters to scheme administrators, and the full April 2027 briefing. There's a £45 version for estates with no tax to pay. See both →
And if you're dealing with an estate now, the Land Registry form filler completes the forms needed to transfer a property after a death. Free.