The UK government has announced plans to include unused pension pots in inheritance tax calculations from April 2027. This means that millions of families who have not used their pension pots to buy an annuity or take a lump sum will be at risk of being caught out by the new rules.
For years, pensions have been one of the most tax-efficient ways for UK consumers to save for retirement. However, this change could pull savings into inheritance tax, leaving families facing unexpected tax bills.
The change is set to affect anyone who has an unused pension pot and does not take steps to mitigate the impact. This includes those who have chosen to leave their pensions untouched or have not yet reached the age of 75 when they can take a lump sum.
Experts are warning families to check their pension pots now to understand the implications of the change and make informed decisions about their savings. With just over three years until the new rules come into effect, it is essential that families act quickly to avoid unexpected tax bills.