Is a pension left to a spouse exempt from inheritance tax from 2027?

Generally, yes. The spouse and civil partner exemption applies to pensions from 6 April 2027 as it does to the rest of the estate. It is limited where the deceased was a long-term UK resident and the spouse or civil partner was not.

Can a pension left to a spouse still increase the inheritance tax?

It can, through the residence nil-rate band. The exempt pension still counts towards the £2 million taper. In the worked example a £100,000 pension left to a spouse raises the tax on the rest of the estate by £20,000.

Is a spouse’s dependants’ pension counted?

No. A dependants’ scheme pension is an excluded benefit, so it is left out of the estate altogether, rather than counted and then exempted.

Death benefits and IHT · Inheritance tax (from 2027)

Pensions and the spouse or civil partner exemption from April 2027

Unused pension money left to a surviving spouse or civil partner keeps the usual inheritance-tax exemption. It still counts in one place, though: the £2 million taper on the residence nil-rate band.

4 min read · Last reviewed 28 Sept 2026

— In short

From 6 April 2027 a pension that passes to a surviving spouse or civil partner is exempt from inheritance tax under the same exemption as the rest of the estate. The exemption is limited where the deceased was a long-term UK resident and the spouse or civil partner was not. The exempt pension still counts towards the £2 million residence nil-rate band taper, so it can raise the tax on the rest of the estate.

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For deaths on or after 6 April 2027, most unused pension money counts towards the estate for inheritance tax. The ordinary exemptions come with it. HMRC's technical note confirms that the exemptions in IHTA 1984 ss.18, 23, 24, 24A, 25 and 27 apply to pension property, and the spouse and civil partner exemption is the one most estates will meet.

The rule

IHTA 1984 s.18 exempts value passing to the deceased's spouse or civil partner. Finance Act 2026 added s.18(3A) for pensions: any pension benefit the spouse or civil partner receives, or has a right to receive, from the scheme on the member's death, other than as an excluded benefit, is treated as passing to them, so the exemption can apply to it. The scheme must tell the personal representatives how the pension splits between exempt and non-exempt beneficiaries, and the personal representatives claim the exemption in the estate's account. A hold-back notice cannot touch the spouse's share.

Exempt is not the same as excluded

An exempt pension is counted in the estate first and then relieved. An excluded benefit never enters the estate at all. A dependants' scheme pension paid to a surviving spouse or civil partner is excluded, not exempt; a lump sum or a drawdown fund left to them is counted and then exempt. The difference matters for the residence nil-rate band, below. Death-in-service benefits are the other main excluded class: see death-in-service benefits and IHT.

The long-term residence limit

HMRC describes the exemption as applying to transfers between spouses and civil partners where they are long-term UK residents. Where the deceased was a long-term UK resident and the spouse or civil partner was not, s.18(2) caps the exempt amount at the exemption limit, which is the nil-rate band figure of £325,000, less any amount already exempted that way.

Worked: exempt, but it still counts towards the £2 million taper

The residence nil-rate band tapers away by £1 for every £2 the estate is worth over £2,000,000, and that value is measured before exemptions. So an exempt pension still counts towards the £2 million taper. One of ParaplanAI's pension-IHT test cases shows the effect: the rest of the estate is £2,000,000, including a £175,000 home passing to children, and a £100,000 pension passes wholly to the surviving spouse.

Worked estate · death on 6 April 2027

Pension to the spouse (exempt): £100,000
Taper value without the pension: £2,000,000
Taper value with the pension: £2,100,000
Residence nil-rate band without the pension: £175,000
Residence nil-rate band with the pension: £125,000
Inheritance tax without the pension: £600,000
Inheritance tax with the pension: £620,000
Increase: £20,000

None of the tax is on the pension itself, which is fully exempt. The £20,000 increase comes from the residence nil-rate band falling from £175,000 to £125,000, because the exempt pension took the taper value from £2,000,000 to £2,100,000. The taper itself is explained in the £2 million taper and pensions.

What the exemption does not change

It is an inheritance-tax exemption only. Income tax on the benefit still turns on the member's age at death, as set out in pensions, death benefits and inheritance tax. The wider April 2027 scope is in pensions and inheritance tax from April 2027, and the order of the personal representatives' work is in the personal representatives’ step-by-step. The Pension IHT calculator sends a spouse or civil partner case to the full calculator, which applies the exemption only when full qualification under s.18 is confirmed and otherwise returns the case for manual review. For planning and illustration only; not legal, tax or estate-planning advice.

IHTA 1984 s.18 (as amended by Finance Act 2026 s.69) · IHTM46023 · HMRC “Inheritance Tax on pensions” technical note §§3.3.1, 3.4, 5.2.2, 6.1

Common questions

Is a pension left to a spouse exempt from inheritance tax from 2027?: Generally, yes. The spouse and civil partner exemption applies to pensions from 6 April 2027 as it does to the rest of the estate. It is limited where the deceased was a long-term UK resident and the spouse or civil partner was not.
Can a pension left to a spouse still increase the inheritance tax?: It can, through the residence nil-rate band. The exempt pension still counts towards the £2 million taper. In the worked example a £100,000 pension left to a spouse raises the tax on the rest of the estate by £20,000.
Is a spouse’s dependants’ pension counted?: No. A dependants’ scheme pension is an excluded benefit, so it is left out of the estate altogether, rather than counted and then exempted.

Sources

Based on IHTA 1984 s.18 as amended by Finance Act 2026, HMRC’s May 2026 technical note and HMRC’s Inheritance Tax Manual (IHTM46023).

For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.

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