Headline: Pension rule change may increase inheritance tax bills for families

Why this matters:The rule change could increase tax liabilities for estates and affect inheritance planning decisions.

Date: 24 March 2026

Tags: Business, Finance, UK Policy

Summary:

• Unused defined contribution pensions will be included in estates from next year.

• Change will increase exposure to inheritance tax for some families.

• More estates expected to exceed £325,000 inheritance tax threshold.

• Additional £175,000 allowance applies when passing homes to descendants.

• Married couples can pass up to £1m tax-free using combined allowances.

• Cohabiting couples do not qualify for same inheritance tax exemptions.

• Gifting assets can reduce estate size before new rules take effect.

• Annual £3,000 gifting allowance can be carried forward one year.

• Larger gifts exempt if donor survives seven years after transfer.

• Poor planning could leave families facing unexpected tax bills after death.

What’s next:Individuals may review estate plans before changes take effect next year. Demand for financial advice is likely to rise.