![\"Rachel-Reeves-inheritance-pensions\"](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/03\/Rachel-Reeves-inheritance-pensions-6824358.jpg\" "\\"Rachel-Reeves-inheritance-pensions\\"")
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Chancellor Rachel Reeves is slapping inheritance tax on pensions, so prepare now (Image: Getty)<\/p>\n
Chancellor Rachel Reeves is drawing up a new way of grabbing more money from inheritance tax<\/a> (IHT). You have to be ready.<\/p>\n Unfortunately, we’re not. New research shows that nine out of 10 of us don’t know what she’s doing<\/a>, even though she announced the tax grab in her maiden Budget in October 2024. Reeves said the change would come into force from April 6, 2027. That’s now just over a year away, and it will be on us sooner than we all think.<\/p>\n Tens of thousands will be affected, and they need to start planning now. Because in just over a year, Britons will start being liable to pay IHT<\/a> on their unused pension at death. It’s expected to raise \u00a31billion a year for the Treasury.<\/p>\n Today, there is no IHT on pensions. Many better-off families have deliberately preserved their pots to help them reduce tax bills on death. That’s no longer possible.<\/p>\n From April 2027, unused direct contributions to pension funds and death benefits will be counted as part of an individual\u2019s taxable estate for IHT purposes. This does not apply to defined benefit “final salary” schemes, where there is no money left on death.<\/p>\n IHT bills<\/a> are already climbing fast. They\u2019re expected to climb from around \u00a38.5billion today to more than \u00a314billion by 2030. Reeves has frozen the \u00a3325,000 nil-rate until 2031, along with the \u00a3175,000 main residence allowance.<\/p>\n Rising wages, property prices and share prices will steadily drag more families into the net. IHT is no longer only for the mega-wealthy<\/a>, but the vast majority remain completely unprepared.<\/p>\n Read more: Britain’s most hated tax wrings \u00a3100m more out of bereaved families <\/a><\/p>\n Read more: ‘Fight back against Rachel Reeves – by building your own inheritance tax pot’ <\/a><\/p>\n The change will be an administrative nightmare. As things stand, beneficiaries must settle any tax bill within six months, yet tracking down multiple pension pots and arranging payments could take far longer.<\/p>\n With the clock ticking, the vast majority of adults are unaware of the reforms, new research from Standard Life shows.<\/p>\n Neil Jones, Standard Life\u2019s tax and estate planning specialist, said: \u201cMost estates currently fall below the thresholds for paying IHT<\/a>, so people often only engage with it when they have to. But by 2030, around one in 10 estates are expected to exceed the threshold, and far more people will need to understand and plan for it.\u201d<\/p>\n Today\u2019s IHT nil-rate band was set at \u00a3325,000 back in 2009. If it had risen in line with inflation, it would now be worth \u00a3527,666.<\/p>\n Jones said an estimated \u00a35.5trillion will pass between generations over the next 30 years. \u201cMany who never anticipated facing IHT<\/a> may soon find themselves navigating complex estate planning decisions. Planning now is key to avoiding unwelcome surprises.\u201d<\/p>\n Jones recommended these practical steps.<\/p>\n Update beneficiary nominations<\/p>\n