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Pension Inheritance Tax Calculator

Use this UK pension inheritance tax calculator to estimate how unused pension savings could affect inheritance tax from April 2027.

Pension inheritance tax rules are changing

From 6 April 2027, most unused pension funds and pension death benefits are due to be included in the estate for inheritance tax. This is an estimate only.

Estimated inheritance tax

£80,000

£250,000 of pension is included in the estate under the April 2027 rules used here.

Including the pension increases the estimated Inheritance Tax
Additional IHT from pension £80,000 Compared with the current rules for the same estate.
Pension included in estate £250,000 Potentially chargeable after exemptions and bands.
Taxable estate £200,000 The part of the estate still above the available bands.
See more estate detail
Available allowances £500,000 £325,000 nil-rate band plus £175,000 residence band.
Estimated amount after IHT £620,000 Estate value including the pension after estimated IHT.
Estate before pension £450,000 After debts and liabilities.
Estate including pension £700,000 Estate value after adding the pension included under the selected rules.
Gift tax estimate £0 No chargeable gifts entered.
Effective tax on pension 32% Extra IHT as a share of the pension value.

Pension inheritance tax breakdown

Compare the current treatment with the position expected from 6 April 2027 using the same estate details.

Item Current rules From 6 April 2027
Estate excluding pension £450,000 £450,000
Pension included in estate £0 £250,000
Estate before allowances £450,000 £700,000
Available allowances £500,000 £500,000
Taxable estate £0 £200,000
Estimated IHT £0 £80,000
Extra IHT from pension £0 £80,000

What this means

Under the April 2027 rules used here, the full £250,000 pension is included in the estate for Inheritance Tax.

Compared with the current rules, the pension increases the estimated Inheritance Tax by about £80,000 in this scenario.

This calculator gives an estimate only. It models pension inheritance tax on unused pension funds with simplified inheritance tax assumptions.

It does not model trusts, business or agricultural reliefs, deed variations, charitable reduced-rate calculations, defined benefit edge cases, non-UK residence issues, or inherited pension income tax after death.

What is pension inheritance tax?

Pension inheritance tax refers to inheritance tax that may apply when unused pension savings are passed on after death.

Under the current treatment used by many planners, defined contribution pensions often sit outside the estate for inheritance tax. From 6 April 2027, HMRC says most unused pension funds and pension death benefits will be brought into scope of inheritance tax, which means pension savings can increase the value of the estate for tax purposes.

What changes from 6 April 2027?

From 6 April 2027, most unused pension funds and pension death benefits are due to be included in the estate for inheritance tax purposes. That can change the answer even if the estate itself would already have been close to the nil-rate bands.

Death-in-service benefits payable from registered pension schemes are due to remain outside the estate for inheritance tax. This calculator does not model those excluded benefits separately, so it should not be used for scheme-level death-in-service calculations.

Why the current vs 2027 comparison matters

The useful question is not only whether inheritance tax might be due, but how much extra inheritance tax the pension could create once it is brought into scope. That is why this calculator shows both the current treatment and the April 2027 position side by side.

In some estates the pension creates a direct extra tax charge. In others, it changes the result indirectly by reducing the residence nil-rate band through tapering, even where part of the pension is otherwise exempt.

Does a spouse or civil partner pay inheritance tax on a pension?

Transfers to a spouse or civil partner are generally exempt from inheritance tax. That means the result can change sharply depending on who inherits the pension.

This version applies that exemption to the pension only. If the rest of the estate also passes to a spouse or civil partner, actual inheritance tax could be lower than this simplified estimate.

Does inheritance tax apply if death is before age 75?

Age 75 matters for income tax on inherited pensions, but it is a separate issue from inheritance tax. A pension could still fall within the estate for inheritance tax from 6 April 2027 even where the pension holder dies before age 75.

This calculator stays focused on inheritance tax only. It does not estimate later income tax that beneficiaries may pay when they draw money from an inherited pension.

Pension inheritance tax vs inherited pension income tax

Inheritance tax and income tax are different. Inheritance tax applies to the estate value when someone dies. Income tax may apply later when beneficiaries take withdrawals from an inherited pension.

That means an inherited pension can be affected by more than one tax over time. This calculator estimates inheritance tax only, not the income tax side of future withdrawals.

Frequently Asked Questions

Are pensions subject to inheritance tax?

Under the current treatment used by many planners, pensions are often outside the estate for inheritance tax. HMRC says most unused pension funds and pension death benefits will be brought into scope of inheritance tax from 6 April 2027.

When do the pension inheritance tax rules change?

The change is due to apply from 6 April 2027. From that date, most unused pension funds and pension death benefits are due to be included in the value of the estate for inheritance tax purposes.

Will death-in-service benefits be included?

HMRC says death-in-service benefits payable from a registered pension scheme will be excluded from the value of an individual's estate for inheritance tax purposes from 6 April 2027.

Does pension inheritance tax apply to defined contribution pensions?

Yes. The change is mainly relevant to unused defined contribution pension funds, including uncrystallised funds and remaining drawdown funds.

Does pension inheritance tax apply to final salary pensions?

Defined benefit pensions can work differently because there may not be a remaining pension pot in the same way. However, lump-sum death benefits may need separate treatment depending on the scheme.

Can I avoid inheritance tax by leaving money in my pension?

From 6 April 2027, that is due to become less effective because most unused pension funds will be brought into the estate for inheritance tax in many cases.

Is inherited pension money taxed twice?

It can be affected by more than one tax. From April 2027, unused pension funds may be included for inheritance tax. Separately, beneficiaries may pay income tax on withdrawals from inherited pensions, especially where the pension holder died after age 75.

More UK Financial Calculators

Pension inheritance tax sits between estate planning, retirement saving, and wider tax decisions. Use the Pension Tax Relief Calculator for contribution-side planning, Salary Sacrifice for payroll pension trade-offs, Compound Interest for non-pension saving comparisons, the Savings Tax Calculator for taxable cash interest, and the Lifetime ISA Calculator when you are comparing retirement wrappers.

Pension Tax Relief Calculator → Salary Sacrifice Calculator → Compound Interest Calculator → Savings Tax Calculator → Lifetime ISA Calculator →