Six ways to prepare for IHT changes in April 2027

Inheritance Tax (or “IHT”) changes coming into effect in April 2027 are forecast to impact one in ten households in the UK.

With less than a year to go, reviewing your pensions and other financial planning arrangements now could help you reduce the impact on the legacy you’ve worked hard to build.

In this article, we explain what Inheritance Tax is, what’s changing from April 2027, and six practical ways you can start preparing for the changes.

What is Inheritance Tax (IHT)?

IHT is the tax charged by the Government via HMRC on the value of your estate when you pass away. Below is a brief overview of the amounts/rates of IHT subject to certain conditions:

Source: Inheritance Tax, Office for Budget Responsibility
*Allowances apply subject to eligibility, particularly for the RNRB. Unused NRB and RNRB can be transferred to a surviving spouse or civil partner. Thresholds are frozen until at least 2030, which is why more estates are being affected (per OBR forecasts)

What is currently included in an IHT bill?

At the time of writing, IHT applies to what someone owns at death and certain assets (any resources of financial value) and transfers made during their lifetime. This includes some lifetime gifts, particularly those made within seven years of death, gifts into certain trusts, or gifts where the person continues to benefit from the asset.

All UK property and UK‑based assets are currently included in an IHT bill, regardless of where someone lives. Since April 2025, if an individual is classed as a long‑term UK resident, having been resident in the UK for 10 of the previous 20 tax years, their worldwide assets may also be included.

Most trusts fall within IHT, and charges can be made on assets when they’re transferred into a trust, usually at periodic intervals, or when assets leave the trust.

What’s changing for IHT in April 2027 – and what will the impact be?

Currently, pensions sit outside of taxable estates – however, from April 2027, most unused pension funds and, if in scope, any pension money that you’ve set aside to pass on to loved ones will fall into the IHT net.

The impact of this change is significant, pushing estates above the Nil Rate Band (£325,000) and into IHT bill calculations for more people than ever before.

How can you prepare for these changes?

At the time of writing, 6 April 2027 is much less than a year away. Taking the time to review your finances and existing arrangements now can help ensure your plans still reflect your personal goals and priorities.

Below, we’ve shared some handy pointers to help you get started:

1. Review the role of your pension

Pensions have traditionally played a dual role: providing income in retirement and, for some, forming part of a legacy for loved ones. With pensions set to become part of estates from 2027, it may be worth taking another look at how your pension wealth fits into the bigger picture.

Specifically, you might want to consider:

• How pension savings could support your lifestyle during retirement.
• How pensions sit alongside other assets, such as property or investments.
• Whether your plans still align with your intentions for the future.

There is no one-size-fits-all approach, and any decisions should reflect your income needs, long-term plans and individual circumstances.

How could a Lifestyle Financial Planner help you?

A Lifestyle Financial Planner can help you step back and look at how your pension fits into your life as a whole – not just for retirement income, but for the future you want to create for yourself and your family.

2. Establish who your pension benefits are paid to

As pension rules change, keeping up-to-date details of who you’ve named to receive pension benefits becomes even more important.

A regular review can help you ensure that:

• Benefits are paid to the right people at the right time.
• Arrangements reflect changes in family circumstances.
• Pension planning remains aligned with wider estate planning.

It’s a simple step, but one that can make a real difference over time.

How could a Lifestyle Financial Planner help you?

A Lifestyle Financial Planner can help you check that the right people are named and that everything still reflects your wishes, especially if your family situation or plans have changed over time.

3. Plan ahead for potential tax bills

If your pensions and the pension funds you’re planning to pass on to loved ones are expected to contribute to an IHT bill in future, it may help to think ahead about how you might fund any potential charges.

For example, life cover written in trust is sometimes considered as a way of providing funds to help your beneficiaries pay an IHT bill, rather than needing to sell assets at a difficult time.

These arrangements are typically reviewed as part of a broader financial plan and are not suitable for everyone, and age, health, affordability and personal objectives all need careful consideration as part of this step.

How could a Lifestyle Financial Planner help you?

A Lifestyle Financial Planner can help you think through how any future tax bills might be managed, so loved ones are not faced with difficult decisions at an already challenging time.

4. Look at your estate planning early

Reviewing estate values and planning options early can help you to:

• Understand your potential exposure.
• Avoid surprises later on.
• Make informed decisions with enough time to adapt if needed.

Estate planning is rarely static, and regular reviews can help keep plans on track as rules and circumstances change.

How could a Lifestyle Financial Planner help you?

A Lifestyle Financial Planner can help you start the conversation early and at your pace, giving you more confidence and flexibility as your circumstances and the rules change.