Published: 07/04/2026 By Oliver O'Brien
As we wrap up our pension series, we’re looking at one of the biggest recent changes, how pensions may impact Inheritance Tax (IHT).In simple terms, pensions will now be included when calculating your estate for IHT. They won’t sit within your estate in the traditional sense, but their value could still increase the amount of tax due.
What does “unused pension” mean?
This change mainly affects money left in your pension when you pass away.
That could include:
- Funds you haven’t yet accessed
- Money left in drawdown
- Savings you chose not to withdraw
Should you be doing something about it?
For many, this raises an important question: should I start using my pension differently?
Pensions are there to support your lifestyle in retirement, so drawing from them, rather than leaving them untouched can form part of a sensible strategy. However, it’s important to strike the right balance so your income remains sustainable throughout your lifetime.
Why this matters more than ever
More estates are now being drawn into the IHT net. With thresholds frozen since 2009, it’s no longer just high-value estates affected. Owning a property and building up a pension over time can be enough to create a potential liability.
The importance of planning ahead
There’s no one-size-fits-all solution, but taking advice early can make a significant difference.
With the right plan in place, you can:
- Structure your pension withdrawals efficiently
- Maintain a reliable retirement income
- Reduce the risk of unnecessary tax for your estate
These changes highlight just how important it is to view your pension as part of your wider financial plan and not in isolation.
If you’re at a crossroads or unsure how these changes affect you, now is the time to act. Speaking to a tba wealth advisor can help you make clear, confident decisions about your future and ensure your plans remain aligned with your long-term goals.
Call us on 020 8661 7878 or email advice@turpinba.co.uk