UK Pension Inheritance Tax Calculator
Your pension and your estate
From 6 April 2027 unused pensions count for Inheritance Tax. See what your family would really keep once Inheritance Tax and their own Income Tax are paid.
Inheritance Tax and Income Tax figures current for 2026/27 (frozen until April 2031), last checked against GOV.UK.
Results update as you type
What your family keeps
From 6 April 2027 your unused pension counts for Inheritance Tax. Dying at 75 or over, the 2 people inheriting then pay Income Tax on what they take out, though not on the part that went in Inheritance Tax.
Adding the pension also puts £60,000 more Inheritance Tax on the rest of your estate: the tax is shared across everything, so the pension takes its share of the allowances too. Inheritance Tax is paid by the people dealing with your estate; they can ask the pension scheme to pay the pension’s share. Income Tax is worked out at 2026/27 rates for every year.
Where your £300,000 pension goes
Of your £300,000 pension, £60,000 goes in Inheritance Tax and £74,920 in Income Tax, leaving £165,080 for your family.
| Person | Earns a year | Share after Inheritance Tax | Income Tax | Keeps |
|---|
| If you die | Before April 2027 | From April 2027 |
|---|---|---|
| Under 75 | £300,000100% kept | £240,00080% kept |
| At 75 or over | £201,08067% kept | £165,08055% kept |
How it’s worked out
| Step | Amount |
|---|---|
| Your estate: your home and everything else | £700,000 |
| Plus your unused pensions, from April 2027How your pension pot could grow before then. Open in Pension Calculator. | £300,000 |
| Nil-rate bandIt has been £325,000 since 2009. See what that is worth today. Open in Inflation Calculator. | −£325,000 |
| Residence nil-rate band | −£175,000 |
| Taxable at 40% | £500,000 |
| Inheritance Tax on the whole estateGifts, charity, business relief and more, with your pension included. Open in Inheritance Tax Calculator. | £200,000 |
| The pension’s share: £300,000 of the £1,000,000 chargeable | £60,000 |
| The pension after Inheritance Tax | £240,000 |
| Income Tax as they take it out (£120,000 each, over 10 years)Tax, National Insurance and take-home pay on their own income, before anything from the pension. Open in PAYE Salary Calculator. | −£74,920 |
| Your family keeps | £165,080 |
Inheritance Tax uses the 2026/27 bands, frozen until April 2031. Income Tax is worked out on each person’s own income plus what they take out, in equal amounts each year.
Using this calculator
Enter your unused pensions, the rest of your estate, and who will inherit the pension. The calculator works out the Inheritance Tax on the whole estate from April 2027, the part that falls on the pension, and the Income Tax your beneficiaries then pay on what they take out.
- Inheritance Tax is shared across everything chargeable in proportion to its value, so a pension worth a third of the estate bears a third of the tax.
- If you die at 75 or over, your beneficiaries pay Income Tax on what they draw, but not on the part that went in Inheritance Tax. Taking it out over several years, rather than at once, can keep more of it in a lower tax band.
- A pension left to a husband, wife or civil partner is free of Inheritance Tax, though they still pay Income Tax on it after a death at 75 or over.
- If the people sharing the pension earn quite different amounts, choose “They earn different amounts” and give each their own income: each one’s equal share is then taxed on their own income, and the results show what each person keeps.
For how the new rules work, who pays, and what you can do about them, read pensions and Inheritance Tax from April 2027.
Where the figures come from
Every rate and rule checked against GOV.UK and the legislation in October 2026.
- Finance Act 2026, section 66: unused pension funds and death benefits form part of the estate for deaths on or after 6 April 2027, and what’s left out, such as death-in-service benefits and dependants’ scheme pensions.
- Finance Act 2026, section 70: Income Tax on an inherited pension isn’t charged on the part that went in Inheritance Tax.
- HMRC: Inheritance Tax on pensions, technical note: who pays, the spouse exemption, and how the tax is shared between the pension and the rest of the estate.
- HMRC Pensions Tax Manual, PTM172000: death benefits tax-free before 75 (lump sums up to the £1,073,100 allowance), taxed as the beneficiary’s income from 75.
- GOV.UK: Inheritance Tax residence nil-rate band: £175,000, tapered away above £2 million; and Finance Act 2026, section 72: the bands frozen to April 2031.
- GOV.UK: Income Tax rates and Personal Allowances, 2026/27.
Frequently asked questions
Do pensions count for Inheritance Tax from 2027?
Yes. For deaths on or after 6 April 2027, most unused pension funds and death benefits are added to your estate for Inheritance Tax. Until then they’re usually outside it. Death-in-service benefits and dependants’ scheme pensions are left out.
Who pays the Inheritance Tax on a pension?
The people dealing with your estate (your personal representatives) work it out and pay it. They can ask the pension scheme to pay the pension’s share straight to HMRC, and the people who inherit the pension are also liable for the tax on it.
How is the tax shared between the pension and the rest of the estate?
The tax is worked out on the whole estate, then shared across everything chargeable in proportion to its value. If your pension is a third of what’s chargeable, it bears a third of the tax.
Will my family pay Income Tax as well?
If you die at 75 or over, yes: whoever inherits pays Income Tax at their own rate on what they take out. They don’t pay Income Tax on the part that went in Inheritance Tax. If you die before 75, they can usually take it out tax-free.
What’s the most tax a pension can face?
For a death at 75 or over, Inheritance Tax at 40% and then Income Tax at 45% on the remaining 60% take about 67% of the pension. It can be more if the pension pushes the estate over £2 million, where the residence nil-rate band is tapered away.
Is a pension left to my husband, wife or civil partner taxed?
It’s free of Inheritance Tax, like anything else left to a spouse or civil partner. If you die at 75 or over, they still pay Income Tax on what they take out.
Does the pension count towards the £2 million taper?
Yes. From April 2027 the pension is part of the estate, so it counts towards the £2 million above which the £175,000 residence nil-rate band is reduced by £1 for every £2.
Does spreading withdrawals over several years help?
Often, yes. Taking a large sum in one year can push the beneficiary into a higher tax band or past £100,000, where their Personal Allowance starts to go. Spreading it out can keep more of it in lower bands.
Should I spend my pension first, or my other savings?
From April 2027 a pension no longer escapes Inheritance Tax, so the old advice to spend everything else first deserves a second look. It depends on your tax rate now, your age, and who you’ll leave it to. A regulated financial adviser can work through it with you.
What about lump sums when someone dies under 75?
Lump sums are tax-free up to the Lump Sum and Death Benefit Allowance of £1,073,100. Above that, the excess is taxed as the beneficiary’s income. Beneficiary drawdown is tax-free, provided it’s set up within two years.
Are annuities caught?
A joint-life annuity that carries on paying a survivor is left out. Payments still due under a guarantee period are included. Anything passing to a spouse or civil partner is exempt.
What doesn’t this calculator cover?
Gifts in the last seven years, trusts, business and agricultural relief, charity gifts, defined benefit pensions, and more than one pension going to different people. The Inheritance Tax calculator covers gifts, charity and reliefs.