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Pension IHT (April 2027)
Compare estimated inheritance tax before and from 6 April 2027.
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Pension IHT (April 2027)
Rules from 6 April 2027 · Calculator illustration from paraplanai.co.uk/calculators/pension-iht · Calculator last reviewed 15 Sept 2026. ParaplanAI keeps no record of this illustration.
Print this quick illustration now. Signed-in users can add a client or file reference before saving it as a PDF. Create the compliance annex, with its working and HMRC references, in the signed-in workflow.
Compare an estate before the pension change and from 6 April 2027, including its value, available allowances and estimated inheritance tax.
Free to use, with no sign-up. Your figures stay in this browser unless you choose to share them or send them to your workspace. When you continue from this calculator to the full workbench, its figures (no names or contact details) are held on our servers under a single-use link for 7 days, so they survive a sign-in on another device. Calculation methods and checks.
— Understanding the result
From 6 April 2027, many unused pension funds and death benefits enter the estate for inheritance tax. This calculator shows a simple before-and-after comparison: the estate with the pensions left outside, then the position with the straightforward pension values included under the new rules. It shows the change in the estate, available allowances and estimated inheritance tax. It is a planning comparison, not an IHT return or personal recommendation.
The signed-in calculator records each policy, its evidence and its destination separately, and produces a compliance annex for the client file.
— How it's calculated
Add the familiar parts of the estate
Enter the main home after its mortgage, cash and savings, investments, other assets, other debts and unused pensions. Put rental or additional property under other assets. Keeping these values separate makes the result easy to check.
IHTA 1984 ss.7, 8A–8M and Sch 1A · HMRC IHT400 notes
Tell us who receives the home
If all of the main-home interest entered passes to children or grandchildren, an extra property allowance may be available. A partial interest or a different route needs the full calculator. The comparison also applies the £2 million taper.
IHTA 1984 ss.8D–8M · HMRC IHT435 guidance
Compare before and from 6 April 2027
The first card treats the pension as outside the estate, reflecting the usual position before the change. The second includes it from 6 April 2027. Age 75 affects the beneficiary’s income tax rather than the estate’s IHT, so that point is explained separately instead of being mixed into the headline figure.
HMRC pension-IHT technical note (May 2026) · GOV.UK pension death-benefit tax guidance
— How to use Pension IHT (April 2027)
Step 1
Add the estate values
Enter the main home after its mortgage, cash, investments, other assets, debts and unused pensions. Put rental or additional property under other assets and use zero where a category does not apply.
Step 2
Say whether the home goes to children
Choose Yes only if all of the main-home interest entered passes to children or grandchildren. Use the unusual-case route for a partial interest.
Step 3
Add any transferred allowances
Switch on the transferred nil-rate band or residence nil-rate band only if the full allowance is available from an earlier spouse or civil partner.
Step 4
Check whether the case is unusual
Read the assumptions. If a trust, relief, lifetime gift, survivorship, non-UK residence, charity issue or excluded benefit applies, tick it under “Does anything unusual apply?” and continue in the full calculator.
Step 5
Compare the two positions
Read the estate counted for inheritance tax and the estimated bill before the pension change and from 6 April 2027.
Step 6
Optionally compare an annuity
Enter a real single-life annuity quote, with no guarantee, value protection or survivor/dependant pension, from a provider or from MoneyHelper. The quoted income is shown for reference and does not change the estate IHT calculation.
— Worked example
- Counted for IHT before 6 April 2027
- £1,800,000.00
- Estimated IHT before the pension change
- £520,000.00
- Counted for IHT from 6 April 2027
- £2,300,000.00
- Estimated IHT from 6 April 2027
- £780,000.00
- Estimated IHT increase
- £260,000.00
The pension also removes £150,000.00 of residence allowance in this example. This is a planning estimate, not an HMRC assessment.
— Frequently asked questions
Do all pensions enter the estate for inheritance tax from April 2027?
No. Many unused pension funds and death benefits enter the estate from 6 April 2027, but statutory exclusions and exemptions still apply. The quick comparison lists its assumptions and sends cases with unusual features to the full calculator.
What pension value should I enter?
For planning, enter the best available estimate of unused pension funds and death benefits that could remain at death. After a death, use the final provider valuation. Complex or excluded benefits should be reviewed in the full calculator.
Does adding a pension affect the residence nil-rate band?
It can. Pension inclusion can raise the estate value used for the residence allowance taper. The calculator applies that taper to the from-April-2027 result and includes the allowance in each comparison card.
Does the RNRB taper apply once my pension is in my estate?
Yes. From 6 April 2027 an in-scope pension counts towards the taper value, which is measured after liabilities but before exemptions and reliefs. If that value exceeds £2 million, the residence nil-rate band is reduced by £1 for every £2 over the threshold — so an included pension can taper the band even where the pension itself passes to an exempt recipient.
What does the estimated inheritance-tax change mean?
It is the difference between the estate calculation with the pension left outside and the calculation with it included from 6 April 2027. It is a planning comparison, not a tax assessment or a decision about who must pay.
Why does age 75 matter?
Age 75 usually affects income tax on inherited pension benefits, not the estate inheritance-tax calculation. If death is at age 75 or over, beneficiaries will usually pay income tax at their own rate when they take benefits. The calculator explains this separately and does not add an invented income-tax figure to the estate bill.
Does the annuity illustration estimate a market rate?
No. It uses only a real annual quote that you enter, from a provider or from MoneyHelper’s annuity comparison. The quote must be for a single-life annuity with no guarantee, value protection or survivor/dependant pension, and the illustration assumes the taxable income is spent rather than added to the estate. The quoted income is shown for reference and does not change the inheritance-tax figures.
Does the copied link include my figures?
Yes. The filled calculator link contains the financial figures and closed choices needed to reproduce the result, so anyone with that link can read them. It never includes names, pension labels or policy details. Continuing to the private calculator uses a separate opaque, one-time key instead.