With major changes to how unused pension pots are taxed, your Will could be the key to protecting more of your legacy.
From 6 April 2027, most unused private pension funds will become subject to inheritance tax when their owner dies, potentially exposing family wealth to a significant new tax charge. For some families, however, a carefully planned gift in a Will could significantly reduce the tax bill while supporting a cause close to their heart.
The stakes can be surprisingly high. In a worst-case scenario, beneficiaries could end up with as little as 33p from every £1 left in a pension pot if inheritance tax applies, the pension holder dies after age 75, and withdrawals are subsequently taxed at the beneficiary’s highest rate of income tax.
That makes estate planning, including charitable gifts in a Will, more important than ever for anyone hoping to pass on as much of their wealth as possible.
A recent article in the Telegraph newspaper highlighted that unspent pensions will soon attract inheritance tax.
This article is for general information only and does not constitute financial, tax or legal advice. Tax rules and reliefs may change, and the benefits of any estate-planning strategy will depend on your individual circumstances. Before changing your will or pension arrangements, you should consider seeking independent professional advice.
