For many of the baby boomer generation, who have accumulated substantial pension pots and have been previously advised not to rush to touch these, the news of the withdrawal of the inheritance tax (IHT) exemption for pension funds in the October Budget came as a major shock. However, with careful planning, it may still be possible to pass a pension to the next generation tax free.

One of the major changes made in the Budget was the announcement that IHT would be charged on unspent pension pots.

From 6 April 2027, pension pots passed down on death could result in an effective IHT rate of up to 60% due to the tapering of the residence nil rate band (RNRB).