Labour has confirmed a major inheritance tax change that could cost pension savers thousands. From April 2027, unspent private pension pots will be taxed at up to 40%, even if the saver dies before reaching pension age.
Under current rules, most pensions are passed to loved ones tax-free. But the new policy means tax will be charged if the total estate, including the pension, exceeds £325,000. Experts have called the move “a huge blow” and “particularly unfair” for those who never used their savings.
Former pensions minister Ros Altmann warned, “It’s a penalty on those who did the right thing and saved.” The Government expects to raise £1.5 billion a year by 2029. Around 10,500 estates could face this new tax in 2027/28.
This change may lead many to rethink retirement planning. Some retirees have already withdrawn billions early to avoid future charges. If you have a pension, now is the time to understand how this rule could affect your family’s inheritance.
