UK to tax private pensions as part of inheritance tax from 2027

From 6 April 2027, unused private and workplace pension savings will be included in the calculation of inheritance tax in the United Kingdom. The tax, charged at 40 % on estate values above the £325,000 threshold (up to £500,000 when a home is passed to children), will now treat pension pots like property, savings and investments. HMRC estimates that about 10,500 estates will face inheritance tax for the first time, while roughly 38,500 existing payers could see average extra liabilities of £34,000.

The government is also consulting on extending automatic inheritance rights to cohabiting, unmarried couples. Under current law only spouses and civil partners inherit automatically when a partner dies intestate. Officials note that 68 % of cohabiting couples misunderstand their position, and legal experts warn that new default rules could create a "dangerous false sense of security". The consultation seeks opinions on whether to grant such couples the same automatic rights as married partners, while highlighting the complexity of modern families and the continued importance of a written will.