Pensions fall into inheritance tax confirmed

From 6 April 2027 most unused pension funds and death benefits count towards your estate for inheritance tax. Pensions have sat outside the estate for a long time, so this is the change that moves the most money — and four details decide whether it touches you at all. Anything left to a spouse or civil partner stays exempt, as it is today, provided they are a long-term UK resident, and the charity exemption is unchanged too. So for most couples the first death is unaffected and the question is what happens on the second. Death in service is excluded: if you die as an active member of a registered pension scheme while employed, that lump sum stays outside the estate. The nil-rate bands are frozen at £325,000 and £175,000 until April 2031, so a pension entering the estate is measured against thresholds that are not moving. And the reporting and paying falls to your personal representatives, not the pension scheme — they can tell the scheme administrator to hold back 50% of the benefit for up to 15 months after the end of the month of death, or to pay the inheritance tax straight to HMRC. The Budget on 28 October is a checkpoint on this rather than the decision, because it is already legislated for April 2027. We will check every figure here against the Budget documents on the day and mark what changed.