The Association of Taxation Technicians (ATT) has warned that the move to tax pension pots announced in the Budget last October will have a negative impact on families trying to sort out estates after the death of a relative.

From April 2027, any unused pension funds or death benefits will be included within the value of an individual’s estate on death and be subjected to inheritance tax. Currently excess pension pots fall outside the tax regime.

This will remove the opportunity for individuals to use pensions as a vehicle for inheritance tax planning by bringing unspent pension pots and death benefits payable into the scope of inheritance tax from 6 April 2027, which will affect around 8% of estates each year, equivalent to around 50,000 families.