What the numbers mean
Read together, the data suggests the inherited-pension picture is changing at the margin rather than wholesale. Around 10,500 estates are projected to become newly liable to Inheritance Tax from 2027 to 2028, against a base of 31,500 taxpaying estates in 2022 to 2023 (HMRC, 21 July 2025; HMRC, 31 July 2025, both subject to change).
A few observations, offered as general commentary rather than a prediction for any individual estate:
- Most estates are still unaffected. With 4.62% of deaths incurring Inheritance Tax in 2022 to 2023 (HMRC, released 31 July 2025), the majority of families may see no change, though that share has been rising.
- The effect concentrates on larger estates. The roughly 38,500 estates expected to pay more, and the ~£34,000 average increase (HMRC, 21 July 2025, subject to change), point to estates already near or above the thresholds.
- Frozen thresholds add drift. With bands fixed to 2030 to 2031 (gov.uk, July 2026, subject to change) while pension and property values move, more estates can cross the line over time, depending on circumstances.
A pension is a regulated product, and how any of this applies to a specific arrangement depends on the scheme type, the beneficiaries and the wider estate. Many people choose to discuss their position with an FCA-authorised financial adviser or another suitably qualified professional before drawing conclusions.
Sources and methodology
Every figure on this page comes from a named official source and has been checked against the live publication. This section lists them with their reference periods so readers can verify each number directly.
- HMRC, Inheritance Tax on unused pension funds and death benefits (published 21 July 2025). Source of the 213,000, 10,500, 38,500, ~£34,000 and 6 April 2027 figures; all are projections for 2027 to 2028 and subject to change. View source.
- HMRC, Inheritance Tax liabilities statistics commentary (released 31 July 2025, reference year 2022 to 2023). Source of the 4.62%, 31,500, £6.70 billion and 13% figures. View source.
- ONS, Household total wealth in Great Britain (released 24 January 2025, reference period April 2020 to March 2022). Source of the 35% pension share, the 40/14/10% split, and the £293,700 and £181,700 median figures. Great Britain only; excludes State Pension. View source.
- HMRC / GOV.UK, Inheritance Tax (as at July 2026). Source of the nil-rate band, residence nil-rate band, rates and taper threshold. View source.
Where a figure could not be confirmed on a named official source, it has been left out. Nothing here has been estimated, extrapolated or rounded beyond what the sources state, and all figures are subject to change.
Scotland and Northern Ireland
Inheritance Tax is a UK-wide tax, so the HMRC pension and IHT figures above apply across the UK. The ONS wealth data covers Great Britain (England, Scotland and Wales) and excludes Northern Ireland. Succession law differs by nation: Scotland has its own rules, including legal rights for a spouse and children, and Northern Ireland has a separate but broadly similar system to England and Wales. Where an estate crosses jurisdictions, it can be worth taking advice in each.
Frequently asked questions
How many estates will be affected by pensions counting for Inheritance Tax?
HMRC projects that of around 213,000 estates with inheritable pension wealth in 2027 to 2028, about 10,500 will become liable to Inheritance Tax that would not previously have been, and roughly 38,500 will pay more than before (HMRC, published 21 July 2025, subject to change). These are projections and may be revised.
When do unused pension funds start counting for Inheritance Tax?
The measure applies to pension member deaths on or after 6 April 2027, when most unused pension funds and pension death benefits will form part of the estate for Inheritance Tax (HMRC, published 21 July 2025, subject to change). Death in service benefits and certain dependants' scheme pensions are excluded under the same source.
How much of UK household wealth is held in pensions?
Private pension wealth made up 35% of total household wealth in Great Britain in April 2020 to March 2022, behind net property wealth at 40% (ONS, released 24 January 2025). This covers Great Britain and excludes State Pension entitlement, and the ONS changed its method in December 2024.
What share of estates actually pays Inheritance Tax?
A minority. In 2022 to 2023, 4.62% of UK deaths resulted in an Inheritance Tax charge, across 31,500 taxpaying estates, with total liabilities of £6.70 billion (HMRC, released 31 July 2025). Inheritance Tax has been payable on fewer than one in twenty estates for many years, though the share has generally been rising.
How much more Inheritance Tax might an affected estate pay?
HMRC expects the average Inheritance Tax liability of an affected estate to rise by around £34,000 once unused pension funds are included, for deaths from 6 April 2027 (HMRC, published 21 July 2025, subject to change). That is an average across affected estates, so individual outcomes can vary widely depending on circumstances.
Are these figures for the whole UK?
The HMRC pension and Inheritance Tax figures are UK-wide, as Inheritance Tax is a UK tax (gov.uk, July 2026, subject to change). The ONS wealth figures cover Great Britain only, so they exclude Northern Ireland (ONS, released 24 January 2025). Succession law also differs between the UK nations.
About Fairchild Oldfield
The Fairchild Oldfield team brings together estate planning, tax, independent financial advice and client care, working with families across England and Wales.
Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience and published official data, not legal, tax or financial advice.
Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ. Figures are drawn from named HMRC and ONS publications with their reference periods shown, are current as at July 2026, and are subject to change; HMRC projections for 2027 to 2028 may be revised. A pension is a regulated product. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.
