Will the Upcoming Pension Changes Affect You?
From April 2027, a major change is coming which means many pensions will be included when the value of your estate is assessed for inheritance tax (IHT). This could make a significant difference for families across North-West Bristol, where many properties are valued well above the national average.
Today, IHT allowances remain unchanged: the first £325,000 of an individual’s estate is IHT-free (the ‘nil-rate band’). If you leave your home to your children or grandchildren, you may benefit from a further £175,000 ‘residence nil-rate band’ so a person with a home eligible for this could pass on up to £500,000 inheritance tax-free.
For a married couple or civil partners, unused allowances can add up, meaning up to £1 million could be protected under the right circumstances.
Who might be affected
The average house price in BS9, for example, is about £620,000, according to recent Land Registry data. Once you add savings, investments and from 2027, pension values, it becomes much easier for an estate to exceed the £500,000 threshold for individuals or the combined £1 million allowance for couples.
Many people will have bought those homes a long time ago and may never have dreamed they might have an estate large enough to pay IHT but as house prices have risen and the thresholds have remained frozen, lots more families are facing tax bills. The change to pensions makes this is even more likely.
Why act now - the next 12 months matter
The change doesn’t come into effect immediately but with just over one year until the new rules hit, now is the time to take stock. That means:
reviewing the value of your home, savings, investments, pensions - together
understanding how the allowances work
exploring whether restructuring (pension withdrawal, gifting, other planning) might help
and thinking ahead to what you want to leave, and to whom.
Waiting until 2027 may leave fewer and less flexible options. Planning now gives you more control and could help avoid a big IHT bill later.
We’re here to help
If you are concerned that the upcoming changes are likely to mean you have an IHT issue, please do get in touch for a complimentary financial review where we can help clarify your position ahead of April 2027 – giving you time to plan. Call us on 0117 3636 212 or email office@haroldstephens.co.uk.