HM Revenue & Customs (HMRC) has confirmed a significant shift in inheritance tax (IHT) rules, set to affect an additional 10,500 estates starting from April 2027. This change comes as part of the government’s efforts to broaden the tax base, leading to an increase in inheritance tax receipts, which reached £730 million in May 2026—up from £701 million a year earlier.
Shaun Moore, a tax and financial planning expert at Quilter, explains, “While monthly tax figures can fluctuate, the overall trend is clear: more estates falling within the scope of inheritance tax due to frozen thresholds and rising asset values.”
Inheritance Tax is levied on the estate—the property, money, and possessions—of a deceased person. From 6 April 2027, pension wealth that is inheritable will be included within the taxable estate for the first time, increasing the tax burden on affected families.
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Currently, HMRC does not have comprehensive data on estate beneficiaries as this information is not required for tax administration. Nevertheless, the government anticipates that out of approximately 213,000 estates with pension wealth during 2027–2028, 10,500 estates will face new inheritance tax liabilities.
Moore adds, “We are entering the final year when pension wealth remains exempt from inheritance tax. Starting April 2027, unused pension savings will be counted toward the taxable estate, significantly expanding the number of families exposed to this tax.”
Nick Henshaw, Head of Intermediaries Distribution at Wesleyan, highlights the challenges ahead: “With less than a year remaining before pensions become subject to inheritance tax, advisers are actively helping clients prepare. However, the lack of detailed guidance from HMRC makes it difficult to provide precise advice.”
Sarah Coles from Hargreaves Lansdown notes the complexity of the tax: “Inheritance tax rules are notoriously complicated. While many understand the basics, there are numerous detailed provisions that remain unclear to most.”
In total, about 38,500 estates will pay more in inheritance tax than before. The average additional liability is expected to rise by around £34,000 when pension assets are incorporated into estate valuations, marking a substantial increase for many families.