News
29 Oct 2026
Budget 2026: pensions and inheritance tax from April 2027
The Budget confirmed unused pensions count for inheritance tax from April 2027. What it means for your estate and executors.
Inheritance Tax Planning Services
Inheritance Tax is charged at 40% on the value of an estate above the tax-free allowances. We help you understand how it could affect your family, and put clear Wills and trusts in place so more of what you’ve worked for reaches the people you love.
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A clear overview of what you own, who it goes to, and how Inheritance Tax could affect your estate.
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Wills written with your tax-free allowances in mind, and trusts that help protect what you leave for your family.
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Making sure your Will deals clearly with your business or farm, so it passes to the right people as you intend.
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Tax rules and family circumstances change, so we review your Will and plans regularly to keep them up to date.
Understanding Inheritance Tax
Inheritance Tax is currently charged at 40% on the value of your estate above the available allowances, and rising property prices mean more families are being caught out than ever before. Without careful planning, a significant part of what you've spent a lifetime building can end up going to HMRC rather than to the people you care about.
The good news is that IHT is often described as "the voluntary tax" for good reason. With the right advice, using trusts, gifting strategies, life insurance written in trust and other legitimate planning tools, it's usually possible to reduce or even remove a liability altogether.
How Inheritance Tax Could Affect Your Estate
Inheritance Tax (IHT) is charged on the part of your estate above certain tax-free allowances when you die. Most estates don't pay it, but rising property values mean more families are affected and planning ahead can make a real difference to what your loved ones receive.
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The nil-rate band
The first £325,000 of your estate is taxed at 0% — this is your nil-rate band. Anything above it is generally taxed at 40%, unless further reliefs and exemptions apply.
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The residence nil-rate band
If you pass your home to your children or grandchildren (including adopted, foster and stepchildren), you may qualify for an extra £175,000 allowance on top of the nil-rate band. This is reduced for estates worth over £2 million.
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Tax on the estate above your allowances
Everything above your combined allowances is generally taxed at 40%. Some of the tax usually needs to be paid before probate is granted, which can put pressure on families, although tax on property can often be paid in instalments.
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Gifts and the 7-year rule
Gifts made during your lifetime usually fall outside your estate if you survive 7 years after making them. If you don't, the gift is counted when IHT is calculated, though the tax on it may be reduced if you survived more than 3 years. Gifts you keep benefiting from, such as a home you still live in, don't count as gifts.
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Spousal and charitable exemptions
Assets left to a spouse, civil partner or charity are usually exempt from IHT. Any unused nil-rate band and residence nil-rate band can be transferred to the surviving spouse, letting couples pass on up to £1 million. Leaving 10% or more to charity can also reduce the rate on the rest of the estate to 36%.
Based on GOV.UK guidance for the 2026/27 tax year. This is general information, not personal financial or legal advice, and tax rules can change. Speak to PJH Estate Planning about your own circumstances.
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Inheritance Tax: FAQ
Worried about how much Inheritance Tax your family could face? Here are answers to the questions we're asked most often. From how much you can leave tax-free to gifts, pensions, Trusts and when the bill has to be paid.
See all inheritance tax FAQsEveryone has a £325,000 tax-free allowance. If you leave your home to your children or grandchildren, an extra £175,000 residence allowance may also apply, although it's gradually reduced for estates worth over £2 million. Anything above your allowances is usually taxed at 40%.
No. Anything you leave to your spouse or civil partner is normally free of Inheritance Tax, and any allowance you don't use can pass to them. That means a married couple may be able to leave up to £1 million tax-free. Unmarried partners don't get this exemption, so planning matters even more.
Often, yes. You can give away £3,000 a year tax-free, and regular gifts made from your surplus income can also be exempt. Larger gifts usually fall outside your estate if you live for seven years after making them. The rules have catches, so it's worth taking advice before making significant gifts.
Up to now, most pensions have been left outside your estate. From April 2027, unused pension funds are due to be included in the value of your estate for Inheritance Tax, which could push many families over the threshold for the first time. It's a good reason to review your plans now.
Usually by the end of the sixth month after death, and often before probate can be granted. That can leave your family needing to find a large sum before they can access your estate. Planning ahead can reduce the bill and make sure there's a way to pay it.