Pension tax expert urges 'important' account review as new levy comes in
Families have been urged to check if a large HMRC bill is heading their way. Financial planners have warned some people will see a large increase in their tax liabilities as new rules come in.
Labour announced in its first Autumn Budget, back in 2024, that it would expand the remit of inheritance tax. This 40 percent tax applies to the total value of assets you inherit, above certain allowances.
One way to avoid the tax historically has been to pass on your wealth through your private pensions. These are currently not considered part of your estate for inheritance tax purposes.
However, from April 2027, the tax will expand to include unused pensions. Wealth management firm Saltus says many of their customers have raised concerns about the new tax.
Alex Pugh, chartered financial planner with the group, said: "We are having this conversation with every client that could be affected, so 100 percent of clients. No one has said they're unconcerned about it.
"Everyone wants to understand the potential implications for their estate." Ms Pugh said that making pensions liable for inheritance tax could result in a big bill for many people.
She said: "In many cases, clients' largest assets are their property and pension, so bringing pensions into the inheritance tax net can significantly increase potential liabilities. However, while clients are interested in exploring their options, in practice there can be limits to what can be done.
"Many still need these assets to fund their retirement, so they're understandably cautious about making drastic changes purely to mitigate tax." She said a key concern for their customers is how the rules will apply to them in particular.