For years, people have been able to build up retirement pots safe in the knowledge that when they die, these can be passed to their family free of inheritance tax (IHT).
From April 2027, this will change. Pensions will now become a part of someone’s estate when IHT is calculated, meaning those sitting on large pots may end up paying the tax.
For many, this means rethinking retirement planning to reduce the bills their families will face.
Lou Valdini, 71, from York, is one person having to do this. He says the incoming rule has “scuppered his entire retirement planning”.
IHT is owed at a rate of 40 per cent on estates worth more than £325,000, though there are multiple rules which can push this threshold higher.
