Britons face 'perfect storm' as pension change due in April 2027 will drive inheritance tax bills to £14.5bn

From the Newshound archive · first published 10 October 2026.

Millions of families are bracing for heavier inheritance tax burdens as frozen thresholds, climbing property prices and looming pension reforms converge into a 'perfect storm'. From April 2027, unspent pensions and death benefits will be brought into the inheritance tax calculation for the first time, pulling more estates above the threshold. The standard tax-free allowance has been fixed at £325,000 for years, and receipts already hit a record monthly high in June 2026. The government projects inheritance tax revenues will climb from £8.7bn this financial year to £14.5bn by 2030/31.

Estates exceeding the £325,000 frozen threshold face a 40 per cent tax charge, with soaring house prices drawing in families who never anticipated any liability.

Neil Jones, tax and wealth planning specialist at Standard Life, warned that the pension change will expose more families to tax bills on the death of a loved one.