Almost nine in 10 (89 per cent) UK adults have little or no awareness of the inheritance tax (IHT) pension changes to be introduced from next year, according to analysis from Standard Life.

Chancellor,Rachel Reeves, revealed plans in the 2024 Autumn Budget to include pensions in IHT calculations from April 2027. This proposal became a reality when the Finance Bill received Royal Assent last week

The government has estimated that 10,500 more estates will start paying IHT, and around 38,500 estates will end up with higher bills than under the old rules due to the 2027/28 change.

However, a combination of a frozen IHT nil-rate band until 2031, rising property prices, and growth on investments means many more people are likely to be affected in the future, with the Office for Budget Responsibility forecasting IHT receipts to reach £14.5bn by the end of 2030/31, an increase of around 67 per cent from 2025/26.

Modelling by Standard Life shows that if the nil-rate band had risen in line with inflation since the beginning of its freeze, it would now be around £200,000 higher than its current level.

Furthermore, by 2030/31 the IHT threshold could be around £270,000 higher, thus creating a ‘fiscal drag’ effect, with more estates being pulled over the IHT threshold as asset values rise.

Standard Life, tax and estate planning specialist, Neil Jones, said: “With the clock ticking on the final year before pensions fall within the scope of IHT, it’s concerning, though not surprising, that awareness of the change remains so low.

"Most estates currently fall below the thresholds for paying IHT, which can be up to £1m for a surviving spouse with a home, so individuals and their families often only engage with IHT when they have to.

"But by 2030, around one in ten estates are expected to exceed the threshold, so IHT will be something far more people will need to understand and plan for."

The Standard Life research, conducted in February 2026, also found that only one in seven people in Generation X understand how IHT works, despite being the cohort most likely to be dealing with inheritance issues currently.

Overall, the findings also revealed that 30 per cent of UK adults believe their estate will exceed the IHT threshold. Standard Life has said that industry support will be crucial moving forward.

“With an estimated £5.5trn expected to pass between generations in the next 30 years, many people who never anticipated facing IHT may soon find themselves navigating complex financial and estate planning decisions,” Jones continued.

“The pensions and wider industry have a key role in offering clarity on the tax rules, practical guidance, and the insight individuals need to manage their estates effectively.

"Professional financial advisers and estate planners play a crucial role in helping families understand how they might be affected by IHT and creating tax‑efficient plans.”

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