The April 2027 changes affect people differently depending on the size of their pension, the rest of their estate, family circumstances, and whether they are still accumulating or already drawing income. Not every item on this checklist will be relevant to every person. But the questions below are a sound starting point for anyone with a pension and an estate that may be subject to inheritance tax.
Each item below describes what to look at and why it matters. Where a decision requires modelling or regulated advice, we say so.
Check who is named as beneficiary on every pension scheme you hold. Under the post-2027 rules, who receives the death benefits affects the IHT treatment. Nominations can be updated at any time and are not legally binding on trustees, but they are an important signal of intent and will be taken seriously. Review particularly whether the spousal route, direct to children, or a combination best suits your objectives.
Add your pension fund(s) to the rest of your estate — property, ISAs, investments, savings, business interests. Compare the total against the available nil-rate band (£325,000 per person) and residence nil-rate band (up to £175,000 per person). If the total exceeds the combined thresholds, inheritance tax at 40% will be payable on the excess. For couples, the thresholds can be doubled using transferable allowances.
If you are already drawing income in retirement, consider whether drawing from the pension first — rather than from ISAs or other assets — would reduce the eventual IHT liability. ISA funds do not form part of the estate in the same way as pension funds under the new rules. Whether this change in sequence makes sense for you depends on income tax rates, the size of each pot, and the estate's IHT position. Modelling is required.
The pension commencement lump sum (25% of the fund, capped at £268,275) is taken free of income tax and moves funds out of the pension into assets with a different IHT profile. For those who have not yet crystallised their pension, the timing of taking the PCLS — and what is done with the proceeds — is worth reviewing as part of the broader estate plan.
If you have bypass trusts, discretionary trusts or other arrangements used alongside pension planning, review whether these still achieve their intended purpose under the new rules. Some trust structures used to hold pension death benefits or to shelter them from IHT were designed around the pre-2027 rules and may need updating. The FCA does not regulate trust advice — a private client solicitor should be involved.
Pension funds passing to a surviving spouse remain free of IHT on the first death under the spousal exemption. But the pension then sits in the surviving spouse's estate and will be subject to IHT on the second death if unspent. For married couples, the estate plan needs to account for both deaths — the sequencing and spending strategy of the surviving spouse becomes part of the plan.
The checklist above describes the considerations. Working out what to do about them — in the right order, for your specific estate, income tax position, and family circumstances — requires regulated financial advice.
Aetas Wealth provides independent pension and inheritance tax planning, led by Peter Rose APFS, a Chartered Financial Planner and Pensions Specialist with over 50 years of experience. The first conversation is free and carries no obligation.
The Financial Conduct Authority does not regulate Wills, Trusts or Tax advice. Tax treatment depends on individual circumstances and may be subject to change in the future. The checklist on this page describes general considerations and does not constitute regulated financial advice. Before making any changes to your pension or estate plan, we recommend speaking with a regulated financial adviser who can assess your specific circumstances.
Book a free initial conversation with Peter Rose APFS. We will work through your estate position, pension structure, and what the April 2027 changes mean for your specific situation.
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