How to use the pension inheritance tax calculator
- 1 Enter your estate without the pension: property, savings and investments, less debts.
- 2 Enter your unused pension pot.
- 3 Enter the value of your home left to children or grandchildren, and whether a late spouse's allowances pass to you.
- 4 Choose your age at death and the beneficiary's income tax rate, then compare.
Worked example
An estate of £600,000 (including a £350,000 home left to children) and a £300,000 unused pension, with no transferred allowances. Today, with £500,000 of nil-rate bands, IHT is 40% of £100,000 = £40,000. From April 2027 the pension counts, so IHT is 40% of £400,000 = £160,000, £120,000 more. The pension's share is £53,333.33. If death is at 75 or over and the beneficiary pays 40% income tax, only £148,000 of the £300,000 pension reaches them.
Planning for pension IHT
- Update your expression of wish form with your pension provider.
- Consider spending or gifting from your pension during retirement.
- Use gifts from surplus income, which are free of IHT.
- Plan with your spouse: transfers between you are exempt.
Work out the full estate bill with the Inheritance Tax Calculator, tax on withdrawals with the Pension Lump Sum Calculator, and growth with the Pension Pot Calculator.
Features
Before and after
IHT under today's rules next to IHT from April 2027.
Both allowances
Nil-rate band, residence nil-rate band and the taper above £2 million.
Double tax at 75+
Adds income tax for beneficiaries when death is at 75 or over.
When to use it
Retirement income planning
Decide whether to draw more from your pension during life. See the tax on withdrawals with the Pension Lump Sum Calculator.
Estate planning
See the full IHT bill on your estate with the Inheritance Tax Calculator.
Gifting
Regular gifts from surplus income are exempt from IHT. Plan savings with the ISA Calculator.
Couples
Everything left to a spouse or civil partner is exempt, and unused allowances pass on to the survivor.
Related Tax tasks
Frequently asked questions
Are pensions subject to inheritance tax from 2027?
Yes. From 6 April 2027 most unused defined contribution pension funds and pension death benefits will be included in the value of your estate for Inheritance Tax, under the Finance Act 2026. Before then they are usually outside the estate.
What pension benefits are excluded?
Death in service lump sums from registered pension schemes, dependants' pensions from defined benefit schemes, and pensions left to a spouse, civil partner or charity remain free of IHT.
Who pays the inheritance tax on a pension?
The personal representatives of the estate report and pay it. They can ask the pension scheme to pay the tax directly to HMRC from the pension, and can ask it to withhold up to 50% of taxable benefits while the estate is sorted out.
What happens if I die after 75?
Your beneficiaries pay income tax at their own marginal rate on money they draw from an inherited pension. From April 2027 this can apply after IHT, so a pension could face a combined tax rate of over 60%.
What if I die before 75?
Beneficiaries can usually draw inherited pension money free of income tax, within the lump sum and death benefit allowance of £1,073,100, but IHT can still apply from April 2027.
What are the inheritance tax allowances?
The nil-rate band is £325,000 and the residence nil-rate band is up to £175,000 when your home goes to direct descendants. Both are frozen until April 2030, and unused amounts can pass to a surviving spouse, giving a couple up to £1 million.
What is the residence nil-rate band taper?
It is reduced by £1 for every £2 the estate is worth above £2 million. From April 2027, pensions count toward that £2 million.
How is IHT split between the estate and the pension?
Broadly in proportion to their values. The calculator splits the tax this way to show the share falling on the pension.
Is this financial advice?
No. It is an estimate under the rules confirmed for April 2027. Speak to a regulated adviser before changing how you draw your pension.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Built and reviewed by Hamza Farooq, founder and lead developer
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