UK Inheritance Tax Changes Affect Pension Savings

The UK government's upcoming changes to inheritance tax (IHT) will impact pension savers starting in April 2027, prompting many families to reassess their financial planning strategies. New regulations will include defined contribution pensions under IHT, potentially subjecting heirs to a 40% tax alongside income tax on withdrawals. Recent surveys indicate a significant lack of confidence among the mass affluent regarding their inheritance planning, with many feeling unprepared for the impending tax changes. Experts suggest that these reforms will lead to increased demand for financial advice as savers seek ways to manage their estates and minimize tax liabilities. To adapt, some individuals are considering options such as annuities or making financial gifts to family members to mitigate the tax impact. These shifts represent a major alteration in how pension wealth is treated, affecting thousands of estates across the UK.