Protecting Your Pension: The Impact of the 2027 IHT Rules
Keeping pension funds invested has long been a smart move for tax efficiency—but from April 2027, new IHT rules mean this strategy comes at a price. So, could life cover offer a solution?
I ndependent Financial Advisors
In April 2015, the 55% “death tax” on Defined Contribution (DC) pensions was scrapped and the beneficiary drawdown was introduced, turning DC pensions into a multi-generational tax-efficient wrapper. The government now plans to close that route.
From 6 April 2027, most unused DC pension funds and pension death benefits will be included in your estate for inheritance tax purposes regardless of your age at death. This signals a major shift in direction for investors who have, up until now, used their pension as a valuable estate-planning tool. In fact, the Office for Budget Responsibility (OBR) suggests this will mean 10,500 estates will be newly paying IHT in 2027-28. But just because the Government wants to align pensions with how other assets are taxed on death, doesn’t mean you can’t take steps to tackle the impact.
Amber River explore how insurance protection can play an important part in your pension and estate planning for the future.
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