The vast majority of adults are unaware of the upcoming inheritance tax pension changes, according to new research from Standard Life.
Nine in 10 (89%) UK adults have little or no awareness of the policy changes announced in the 2024 Autumn Budget.
The reforms mean that from April 2027 most unused pension funds and death benefits will fall within the scope of inheritance tax, becoming part of an individual’s taxable estate. Government estimates suggest that an additional 10,500 estates will be brought into paying inheritance tax due to the change in 2027/28, with around 38,500 estates facing higher inheritance tax bills than under previous rules.
According to the Office for Budget Responsibility, inheritance tax receipts are set to reach £14.5 billion by the end of 2030/31, an increase of around 67% from 2025/26.
However, had the nil-rate band risen in line with inflation since its freeze in 2009, it would be around £200,000 higher in 2026/27 than its current level. Looking ahead to the end of the freeze in 2030/31, Standard Life said the nil rate band could be around £270,000 higher at £593,893 rather than £325,000.
Neil Jones, tax and estate planning specialist at Standard Life, said: “With the clock ticking on the final year before pensions fall within the scope of inheritance tax, it’s concerning, though not surprising, that awareness of the change remains so low.
“Most estates currently fall below the thresholds for paying inheritance tax, which can be up to £1 million for a surviving spouse with a home, so individuals and their families often only engage with inheritance tax when they have to. But by 2030, around one in 10 estates are expected to exceed the threshold, so inheritance tax will be something far more people will need to understand and plan for.”
Standard Life said industry support will be crucial moving forward. Over 30% of adults think their estate will exceed the inheritance tax threshold, rising to 40% of millennials and 36% of Gen Z.
Standard Life recently launched a dedicated inheritance tax hub, offering webinars, articles and practical guidance on how the reforms will impact estate planning.
Jones added: “With an estimated £5.5 trillion expected to pass between generations in the next 30 years, many people who never anticipated facing inheritance tax may soon find themselves navigating complex financial and estate planning decisions.
“The pensions and wider industry have a key role in offering clarity on the tax rules, practical guidance, and the insight individuals need to manage their estates effectively. Professional financial advisers and estate planners play a crucial role in helping families understand how they might be affected by inheritance tax and creating tax‑efficient plans.”
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