Unused pension pots taxed at 40% from 2027

Inheritance tax will be charged on all unused pension pots from April 2027 with income tax liability for those aged over 75 and a six-month payment deadline

The government will bring unused pension funds into scope of inheritance tax (IHT) from 6 April 2027, but death in service benefits paid by employers will remain outside the IHT regime for now.

This means that an interest in a registered pension, a qualifying non-UK pension scheme, or a section 615(3) scheme will be taken into account in valuing a person’s estate for IHT purposes.

Payment will be required within six months, with no difference to usual IHT deadlines, regardless of the complexity of the new framework.

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