UK Pension Inheritance Tax Calculator — The April 2027 Change
From 6 April 2027, most unused UK pension funds will be pulled into the value of your estate for Inheritance Tax purposes — a major change, since pensions have historically sat outside the estate entirely. With IHT charged at 40% above the £325,000 nil-rate band (one band covers the whole estate, not a separate one for pensions), this calculator shows exactly how much extra tax the change could add for your situation.
A simplified estimate using the standard nil-rate band and 40% rate — real estates can involve trusts, business/agricultural relief, and the residence nil-rate band taper for larger estates. Get advice from a qualified estate planner for anything beyond a rough estimate.
Based on the UK government's confirmed policy for pensions and Inheritance Tax from 6 April 2027. A simplified model using the standard 40% rate and nil-rate band — trusts, reliefs and the residence nil-rate band taper for large estates can change the real figure. Get professional estate planning advice for anything beyond a rough estimate.
How to use this tool
- Enter the value of the rest of your estate (property, savings, investments) — everything except your pension.
- Enter your unused pension pot value (what's left undrawn).
- Adjust the nil-rate band if you know you qualify for the residence nil-rate band on top of the standard £325,000.
- Tick the exemption box if the pension is left to a spouse, civil partner or charity — press Calculate either way to see the before/after comparison.
Frequently asked questions
What exactly is changing on 6 April 2027?
Currently, most unused defined contribution pension funds pass to beneficiaries outside your estate, free of Inheritance Tax. From 6 April 2027, the residual value of most pensions will count as part of your estate for IHT purposes, taxed at 40% above your available nil-rate band — the same as the rest of your estate.
Is there a separate tax-free allowance for pensions?
No — there's no standalone pensions nil-rate band. The existing £325,000 nil-rate band (plus the £175,000 residence nil-rate band if it applies) covers your whole estate, pension included, once the change takes effect.
Does leaving my pension to my spouse avoid the tax?
Yes — transfers to a spouse or civil partner remain fully exempt from Inheritance Tax, and the same exemption applies to pensions left to charity. The change mainly affects pensions left to children, other family members, or anyone outside those exempt categories.
How many people will actually be affected?
Government estimates suggest that of roughly 213,000 estates expected to include pension wealth in 2027-28, about 10,500 will face an IHT charge as a direct result of this change — a minority, but a significant one, especially for people with larger pension pots relative to their overall nil-rate band headroom.