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Pension pots join IHT net
A reform will count pension pots in estate values for inheritance tax from 2027, expanding the tax net for many families.
A new rule will count pension pots in estate values for inheritance tax, reshaping how families plan and potentially raising bills by 2030.
Pension pots enter estate tax net as IHT rules tighten
From April 2027, pension pots will be included in people’s estates for inheritance tax, moving retirement savings into the IHT net. The change could push more middle class households toward a tax bill as home values, savings and pensions rise together. Wealth and Personal Finance asked Quilter to model six family profiles and found that many could face higher IHT bills by 2030 even when today they face little or no tax.
Key Takeaways
"There has been a noticeable shift in behaviour since the Chancellor announced changes to IHT last autumn."
Direct quote from a Quilter adviser used to illustrate changing attitudes toward gifting and planning.
"Gifting early could be the key to staying within thresholds"
Editorial take on practical responses readers can consider.
"Pensions will be included in IHT, a change that reshapes family planning"
Summary of policy change from Quilter analysis.
"This is not just about the rich, it touches ordinary families"
Commentary on the broader impact beyond high-net-worth individuals.
The shift is framed as a revenue move, but it alters how families plan for the long run. It could widen gaps between households that can adapt quickly and those that cannot, because pensions are a large, often overlooked piece of wealth. The policy also tests the fairness of interaction between lifetime savings and what families leave behind. This is not just a financial tease; it is a political moment that could influence how people save, gift and talk about money with relatives.
Highlights
- Pension pots are joining the estate tax net
- Middle class families face a tax trap if they delay planning
- Gifting early could shield heirs from big bills
- This policy change tests the fairness of how wealth is taxed
Budget and political sensitivity around IHT changes
The article discusses a major tax policy shift that could alter family wealth trajectories and trigger political feedback. Readers include budget watchers, investors and households who may feel affected by future tax bills. The piece highlights new rules, gifting behavior and potential reform, all of which carry policy and public reaction risk.
Policy change follows a period of budget pressure, and its effects will unfold in living rooms across the country.
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Inheritance tax changes will include pensions starting April 2027
