More than half of UK adults are planning to adjust their retirement or estate planning due to upcoming inheritance tax (IHT) changes on pensions, according to new research.
A snap poll by interactive investor found 54 per cent of people intend to modify their financial plans ahead of reforms that will include unused pension savings in inheritance tax calculations from April 2027.
The survey, conducted in early February 2025 among 1,064 visitors to the investment platform's website, reveals significant shifts in how Britons are approaching their pension and estate planning.
Furthermore, the poll revealed that 21 per cent of respondents plan to withdraw more money from their pensions to spend it before the new rules take effect. A further 19 per cent intend to withdraw additional funds to gift to others, while eight per cent are planning to reduce their pension contributions.
Some six per cent of those surveyed said they would retire earlier than originally planned due to the upcoming changes. Meanwhile, 13 per cent of respondents remain undecided about their response to the new inheritance tax rules.
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Britons are making changes to their pension plans to avoid playing inheritance tax
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Just over a third (34 per cent) have not considered making any changes to their current retirement or estate planning strategy.
The role of pensions in estate planning emerged as a crucial consideration, with 52 per cent of respondents stating their pension forms a key component of their strategy.
Nearly a quarter (23 per cent ) of those surveyed said they consider pensions as part of their inheritance tax planning, though not in detail. A quarter of respondents revealed they have not factored pensions into their estate planning at all.
The survey revealed a significant lack of confidence in the pensions system, with 44 per cent of respondents saying they have no trust in it.
Britons are looking for ways to mitigate their tax liability
GETTYAn additional 17 per cent expressed uncertainty about the system, while 39 per cent maintained their confidence.
Myron Jobson, a senior personal finance analyst at interactive investor, said: "Our survey shows that, despite uncertainty over how IHT on pensions will be implemented, many people are already considering pre-emptive steps to reduce their future tax burden."
He warned that withdrawing larger pension sums could push retirees into higher tax brackets and risk depleting pension savings too quickly.
"Stability and clarity are essential to ensuring people feel secure in their retirement planning," Jobson added.
The inheritance tax changes are set to have a widespread impact, with nearly 153,000 estates facing new or additional IHT liability by 2030, according to OBR data obtained through a Freedom of Information request.
The proportion of estates subject to inheritance tax is expected to almost double, rising from 5.2 per cent in 2023/24 to 9.5 per cent by 2029/30.
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Britons are preparing for drastic changes to inheritance tax rules GETTY Of those affected, 31,200 estates will become newly liable for IHT by the end of the 2029/30 tax year. A further 121,500 estates will face increased IHT liability under the proposed changes.
The OBR expects these changes, alongside extended nil-rate band freezes until 2029/30, to generate an additional £2.5 billion in tax receipts.
The average inheritance tax bill per estate is projected to be £169,000 in the 2027/28 tax year.This figure is expected to increase by approximately £34,000 when pension assets are included in estate valuations.
The OBR estimates suggest the average tax liability will remain broadly stable through to 2030, despite the significant increase in the number of estates affected.
