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FlashPortugalOctober 4, 2026

UK Pensions to Face Inheritance Tax from April 2027, Affecting Expats

PublishedEditorial policy

From April 6, 2027, unused UK pension funds and death benefits will become subject to Inheritance Tax (IHT) for the first time. This significant change could substantially impact the inheritance for expatriates with UK pension savings, necessitating early financial planning.

UK PensionsInheritance TaxExpatsTax PlanningPortugalПортугалия

Key takeaways

  • From April 6, 2027, UK pension funds and death benefits will be included in Inheritance Tax (IHT) for the first time, impacting all, including expatriates with UK savings.
  • Heirs could face significantly increased tax liabilities if proactive planning is not undertaken.
  • It is crucial to review financial plans and seek specialist advice before April 2027 to mitigate potential tax burdens.

UK Pensions to Become Subject to Inheritance Tax from April 2027

As of April 6, 2027, UK pension funds and death benefits will, for the first time, be included in Inheritance Tax (IHT) calculations. Previously, these assets were exempt from IHT. This change marks a significant shift, as pension savings often represent one of the largest assets for many families.

The scope of IHT has been expanding, with frozen allowances and rising property values drawing more individuals into the tax net. The inclusion of pension funds will accelerate this trend. Importantly, this change applies universally, meaning expatriates with UK pension savings will also be affected, with no specific exemptions for non-residents.

For individuals with substantial UK pension accumulations, it is crucial to understand how this reform will impact their estate and to explore strategies for mitigating the potential tax burden on their heirs. Consulting with a specialist in tax planning is advisable well in advance of April 2027 to review financial plans and minimize future tax liabilities.

Sources

Based on Emigro corridor reporting. Primary links below.

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