New research has shown that a huge swathe of older people in the UK are unaware of how the new inheritance tax (IHT) rules that will bring pensions into the scope of inheritance tax (IHT) from April 2027.

Two fifths (40%) of UK adults aged 55 or over – the equivalent of 8.5 million people – remain completely unaware of new rules that will see pensions brought into the scope of inheritance tax (IHT) from April 2027, new research from Canada Life has revealed.

According to the latest official data, the change announced by the Government in October’s Autumn Budget is expected to almost double the number of estates subject to inheritance tax, with almost one in ten (8%) forecasted to be captured by the tax each year by 2030. This is projected to generate £1.46bn by 2029/2030.

Among those who are aware of the change and have changed their financial plans already, 57% plan to spend more of their savings, 41% are planning to gift more, and 38% intend to withdraw a lump sum from their pension. One in ten (11%) are even considering marriage as a means of passing wealth tax-free to a partner.

The research also reveals that approximately a third (36%) of those aged 55 or over are not aware of any of the listed current gifting rules which could help to reduce inheritance tax.

Some of the least-known gifting rules amongst those aged 55 or over include:

79% are unaware that they can give gifts of up to £250 per person, to as many individuals as they want, without having to pay inheritance tax

• 78% are unaware that financial gifts made from income, given for birthdays or Christmas, are exempt from inheritance tax
• 65% are unaware that gifts between spouses or civil partners are free from inheritance tax
• 62% are unaware of the “Annual Exemption”, which allows people to give away up to £3,000 in cash or assets each year without it being added to their estate for inheritance tax purposes. 91% were also unaware that you can carry forward any unused Annual Exemption to the following tax year
• 53% are unaware that financial gifts can be IHT-exempt if the donor lives for at least seven years after the gift is made

Stacey Love, tax and estate planning specialist at Canada Life, comments: “Although it seems like a long time away, many people may not yet realise that these changes could draw them into the inheritance tax net or could mean loved ones paying a higher amount on their estate.

“Fundamentally, it’s never too early to start considering what the implications may be for you and how you may be able to manage your inheritance tax bill during your lifetime – such as through gifting or setting up a trust.”

Time to check out your retirement finances?

If you have savings, assets or pensions that might make your estate subject to IHT, it might be a good idea to check out how to make adjustments for that by making full use of your RetireEasy LifePlan.

Using the LifePlan, you can run different scenarios and see at a glance just how much you can (for example) afford to gift to family members and still remain on course to enjoy a comfortable retirement.

If your subscription has lapsed, you can restart it for just a few pounds a month – that’s not a lot to ensure peace of mind!