From April 2027, UK pension pots will be taxed as part of your estate at 40% above the threshold. If you die after 75, beneficiaries also owe income tax on withdrawals. Ndubuisi Egwim warns this double tax hits personal pensions like SIPPs but not NHS defined-benefit schemes.
Hey, from April 2027, your pension could become part of your estate for inheritance tax, taxed at 40% above the threshold, and that could mean double taxation for your family. Most unused pension pots come into your estate. If you die after 75, your beneficiaries also pay income tax on what they draw out. That's 2 separate taxes on the same money. Lots of advisors are already calling this the double tax trap, and 2 years ago when this was Just announced in the 2024 budget. I made a video breaking it down. Most people missed it. April 2027, pensions will be included in your estate for inheritance tax purposes. Now, this is a big deal. Back then, it felt distant. It's now just months away. Now, this mainly affects personal pensions like a SIP, like a self-invested personal pension. If you just have the NHS pension, this specific change largely doesn't touch it. The NHS pension scheme still pays a survivor's pension and a death in service lump sum regardless. It's a defined benefit pension. A SIPP, on the other hand, gives you more flexibility. It's defined contribution. You control where it's invested, and you can access it from 55, 57 from 2028, rather than NHS pension, mine is 68. So I'm not saying one is better than the other. Many doctors in our Moneywise Doctor community have both. But it's worth knowing what each one actually covers for your family rather than assuming that either of them has you fully protected. I flagged this 2 years ago. It felt distant then. Now it's real now. So don't keep this to yourself. Share it with someone, a doctor that could help. Follow for more.
