--- title: Inheritance tax shock coming for personal pensions from April 2027 description: "While headlines focus on UK fiscal woes and budget battles, a seismic tax change is flying under the radar: from 6 April 2027, defined contribution (DC) pensions will be pulled into the inheritance tax (IHT) net." image: https://www.octofp-cc.com/hubfs/Senior%20woman%20looking%20at%20dead%20husbands%20picture.jpeg --- [Skip to content](https://www.octofp-cc.com/info/major-inheritance-tax-shock-coming-for-personal-pensions-from-april-2027#main-content) [![Octo FP IFA](https://www.octofp-cc.com/hs-fs/hubfs/Octo%20FP%20IFA.png?width=250&height=250&name=Octo%20FP%20IFA.png)](https://www.octofp-cc.com) - [Home](https://www.octofp-cc.com/) - [About](https://www.octofp-cc.com/about) - [Contact](https://www.octofp-cc.com/contact) - [Client Portal](https://auth.2plan.com/Account/Login?ReturnUrl=%2Fconnect%2Fauthorize%2Fcallback%3Fclient_id%3Dclientportal%26redirect_uri%3Dhttps%253A%252F%252Faccess.2plan.com%252Fsignin-oidc%26response_type%3Dcode%2520id_token%26scope%3Dopenid%2520profile%2520offline_access%2520clientportal_api%2520files_api%2520client%2520twofactor%2520factfind_api%2520valuations_api%26response_mode%3Dform_post%26nonce%3D638274443552204433.MzJhNzY2NjctYmRlMC00NWNjLWJiNzAtZTAxNzQ2MWViMTU4ZDU4NTNlYmMtMTRjOC00M2Y5LWE0ZDktM2ZhZTRhY2RkOGVh%26adviser%3D40592%26state%3DCfDJ8Lci57dWsvZPtVqFVRrAfb2-VVz_zQw_hpGTd8TCutirspHgO1_3jlb7yvNuBVULtM3h_40OkQJESKyuTFyF9q5ObIsdrvZ2L2k_Bc6t7j_cmriROMGmMa_sCb6S4MQ11vCSsWeHDXjqewK543vLQoWfH7r52KkiYg50-XPbOS6NeEZAvbPHpYwsLx6KK7io6ChJDaoa38g56EriAxTCWUGGyrV-XRC2HK4p3HJgar7Vp_NuxW05ucH3B0QJDqaC_dUBsGrNZwyqZogYDVP5jb2HLKo2N-W_eIWKrUuPmgAK9XvoaW2k1pbgbHISKmuIyg%26x-client-SKU%3DID_NET6_0%26x-client-ver%3D6.15.1.0%26acr_values%3Dlogin) - [Thoughts](https://www.octofp-cc.com/info) - [Subscribe](https://www.octofp-cc.com/newsletter-sub) Open main navigation Close main navigation - [Home](https://www.octofp-cc.com/) - [About](https://www.octofp-cc.com/about) - [Contact](https://www.octofp-cc.com/contact) - [Client Portal](https://auth.2plan.com/Account/Login?ReturnUrl=%2Fconnect%2Fauthorize%2Fcallback%3Fclient_id%3Dclientportal%26redirect_uri%3Dhttps%253A%252F%252Faccess.2plan.com%252Fsignin-oidc%26response_type%3Dcode%2520id_token%26scope%3Dopenid%2520profile%2520offline_access%2520clientportal_api%2520files_api%2520client%2520twofactor%2520factfind_api%2520valuations_api%26response_mode%3Dform_post%26nonce%3D638274443552204433.MzJhNzY2NjctYmRlMC00NWNjLWJiNzAtZTAxNzQ2MWViMTU4ZDU4NTNlYmMtMTRjOC00M2Y5LWE0ZDktM2ZhZTRhY2RkOGVh%26adviser%3D40592%26state%3DCfDJ8Lci57dWsvZPtVqFVRrAfb2-VVz_zQw_hpGTd8TCutirspHgO1_3jlb7yvNuBVULtM3h_40OkQJESKyuTFyF9q5ObIsdrvZ2L2k_Bc6t7j_cmriROMGmMa_sCb6S4MQ11vCSsWeHDXjqewK543vLQoWfH7r52KkiYg50-XPbOS6NeEZAvbPHpYwsLx6KK7io6ChJDaoa38g56EriAxTCWUGGyrV-XRC2HK4p3HJgar7Vp_NuxW05ucH3B0QJDqaC_dUBsGrNZwyqZogYDVP5jb2HLKo2N-W_eIWKrUuPmgAK9XvoaW2k1pbgbHISKmuIyg%26x-client-SKU%3DID_NET6_0%26x-client-ver%3D6.15.1.0%26acr_values%3Dlogin) - [Thoughts](https://www.octofp-cc.com/info) - [Subscribe](https://www.octofp-cc.com/newsletter-sub) [All posts](https://www.octofp-cc.com/info/all) November 6, 2025 # Inheritance tax shock coming for personal pensions from April 2027 By  Corey Cook  ·  1 minute read While headlines focus on UK fiscal woes and budget battles, a seismic tax change is flying under the radar: from 6 April 2027, defined contribution (DC) pensions will be pulled into the inheritance tax (IHT) net. Announced in the Autumn Budget 2024 by Rachel Reeves, this shift could hit 1 in 5 DC pension holders—six times more than today.   **What’s Changing?**  - **DC pensions** (money purchase plans) will count as part of your estate for IHT.  - **Spouse transfers** remain tax-free, but legacies to children after both parents die will be taxed.  - **Defined benefit pensions** (secure income) are unaffected.  Previously, DC pensions were tax-efficient legacy tools—especially if death occurred before age 75. That’s about to change.    ![Senior woman looking at dead husbands picture](https://www.octofp-cc.com/hs-fs/hubfs/Senior%20woman%20looking%20at%20dead%20husbands%20picture.jpeg?width=777&height=519&name=Senior%20woman%20looking%20at%20dead%20husbands%20picture.jpeg) **Why It Matters**  This is the biggest pension tax shake-up in 35 years. Many middle-income savers now face unexpected IHT bills. Furthermore, those dying after 75 will be hit with **double taxation**: IHT on the pension pot and income tax on beneficiary drawdowns.  **Example: Susan from Scotland**  Susan (60), unmarried, retiring, and has one son (25), has:  | **Asset**  | **Current Situation**  | **April 2027 (**assuming values remain the same**)**  | | --- | --- | --- | | House  | £550,000  | £550,000  | | Cash  | £39,000  | £39,000  | | ISA  | £204,000  | £204,000  | | Pension (DC)  | £800,000 (Not included in IHT)                     | £800,000 (Now included in IHT)  | | Total Estate  | £793,000 (excluding Pension)  | £1,593,000  | | IHT Exemptions  | (£500,000)  | (£500,000)  | | Taxable Estate  | £293,000  | £1,093,000  | | Potential IHT Bill (40%)  | £117,200  | £437,200 (+273%)  |  Source: Quilter **What Susan Could Do**  - **Put PCLS (25% tax-free portion of Pension) (£200k) into trust**: regains nil rate band after 7 years. - **Draw down £22k/year**: reduces pension size and IHT exposure. - **Result**: legacy to son increases by 24% (£572,000).  ![Two kids making a circle of trust and love](https://www.octofp-cc.com/hs-fs/hubfs/Two%20kids%20making%20a%20circle%20of%20trust%20and%20love.jpeg?width=1000&height=667&name=Two%20kids%20making%20a%20circle%20of%20trust%20and%20love.jpeg) **What You Should Do**  - Start planning early—ideally from your mid-50s.  - Use **trusts** to shelter assets and regain exemptions.  - Consider **life insurance** to cover future IHT bills.  - Review your **drawdown strategy**—pension first may now be best.  Without action, your pension surplus could become a Treasury windfall. Delay is expensive, and procrastination can be costly.  **The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.**   **Please note that the Financial Conduct Authority do not regulate will writing, tax planning and trusts.**    Approved by 2plan wealth management Ltd 06/11/25 FP36297 Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://www.octofp-cc.com/info/major-inheritance-tax-shock-coming-for-personal-pensions-from-april-2027) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://www.octofp-cc.com/info/major-inheritance-tax-shock-coming-for-personal-pensions-from-april-2027) [twitter icon](https://twitter.com/intent/tweet?url=https://www.octofp-cc.com/info/major-inheritance-tax-shock-coming-for-personal-pensions-from-april-2027) [envelope icon](mailto:?body=https://www.octofp-cc.com/info/major-inheritance-tax-shock-coming-for-personal-pensions-from-april-2027) **Links** [Home](https://www.octofp-cc.com) [About](https://octofp-139821909.hubspotpagebuilder.eu/about) [Contact](https://octofp-139821909.hubspotpagebuilder.eu/contact) [Client Portal](https://auth.2plan.com/Account/Login?ReturnUrl=%2Fconnect%2Fauthorize%2Fcallback%3Fclient_id%3Dclientportal%26redirect_uri%3Dhttps%253A%252F%252Faccess.2plan.com%252Fsignin-oidc%26response_type%3Dcode%2520id_token%26scope%3Dopenid%2520profile%2520offline_access%2520clientportal_api%2520files_api%2520client%2520twofactor%2520factfind_api%2520valuations_api%26response_mode%3Dform_post%26nonce%3D638274443552204433.MzJhNzY2NjctYmRlMC00NWNjLWJiNzAtZTAxNzQ2MWViMTU4ZDU4NTNlYmMtMTRjOC00M2Y5LWE0ZDktM2ZhZTRhY2RkOGVh%26adviser%3D40592%26state%3DCfDJ8Lci57dWsvZPtVqFVRrAfb2-VVz_zQw_hpGTd8TCutirspHgO1_3jlb7yvNuBVULtM3h_40OkQJESKyuTFyF9q5ObIsdrvZ2L2k_Bc6t7j_cmriROMGmMa_sCb6S4MQ11vCSsWeHDXjqewK543vLQoWfH7r52KkiYg50-XPbOS6NeEZAvbPHpYwsLx6KK7io6ChJDaoa38g56EriAxTCWUGGyrV-XRC2HK4p3HJgar7Vp_NuxW05ucH3B0QJDqaC_dUBsGrNZwyqZogYDVP5jb2HLKo2N-W_eIWKrUuPmgAK9XvoaW2k1pbgbHISKmuIyg%26x-client-SKU%3DID_NET6_0%26x-client-ver%3D6.15.1.0%26acr_values%3Dlogin) [Info](https://www.octofp-cc.com/info) [Subscribe](https://www.octofp-cc.com/newsletter-sub) [Octofp.com](https://www.octofp.com) [Follow me on Facebook](https://www.facebook.com/octowmcc/) [Follow me on Instagram](https://www.instagram.com/coreycookifa/) [Follow me on LinkedIn](http://www.linkedin.com/in/coreycook) **Legal Documents** [Privacy Policy](https://microsites.2plan.com/PrivacyPolicy/?dm_i=7IAA,9BN1,22M3NE,16HH7,1) [Best Execution Policy](https://www.octofp-cc.com/hubfs/Best%20Execution%20Policy%20Nov%202023-1.docx) [Client Classification](https://www.octofp-cc.com/hubfs/Client%20Classification%20Nov%202023.docx) [Conflicts of Interest Policy](https://www.octofp-cc.com/hubfs/Conflicts%20Of%20Interest%20Policy%20Nov%202023.docx) [Personal Client Agreement](https://www.octofp-cc.com/hubfs/Octofp%20IFA%202025.pdf) [Mortgage and Protection Client Agreement](https://www.octofp-cc.com/hubfs/OCTFO%20MPA%20approved.pdf) [Making a Complaint](https://www.octofp-cc.com/hubfs/Your%20Guide%20To%20Making%20A%20Complaint%20Nov%202023.docx)   Octo Financial Planning Ltd is an appointed representative of 2plan wealth management Ltd which is authorised and regulated by the Financial Conduct Authority. 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Corey Cook is a member of the Society of Will Writers which can be verified [here.](https://www.willwriters.com/listing/corey-cook-octo-financial-planning-secure-will-company/)    ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Corey Cook", "url" : "https://www.octofp-cc.com/info/author/corey-cook" }, "dateModified" : "2025-11-06T14:42:45.858Z", "datePublished" : "2025-11-06T13:48:23.000Z", "headline" : "Inheritance tax shock coming for personal pensions from April 2027", "image" : [ "https://www.octofp-cc.com/hubfs/Senior%20woman%20looking%20at%20dead%20husbands%20picture.jpeg" ], "mainEntityOfPage" : { "@id" : "https://www.octofp-cc.com/info/major-inheritance-tax-shock-coming-for-personal-pensions-from-april-2027", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.octofp-cc.com/hubfs/Octo_Logo_800-removebg-preview-2.png" }, "name" : "Octo Wealth Management Limited" } } ``` ```json { "@context" : "http://schema.org", "@type" : "Article", "author" : { "@type" : "Person", "name" : [ "Corey Cook" ] }, "datePublished" : "2025-11-06T13:48:23+0000", "description" : "While headlines focus on UK fiscal woes and budget battles, a seismic tax change is flying under the radar: from 6 April 2027, defined contribution (DC) pensions will be pulled into the inheritance tax (IHT) net. 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