More than one in three people aged over 55 are unaware that pensions could become subject to Inheritance Tax from April 2027, according to new research.
A survey carried out by YouGov for wealth management firm Mattioli Woods found just 35 per cent of over-55s know that unused pension funds could potentially be included in an estate for Inheritance Tax purposes from April 6 next year.
The findings also suggest inheritance remains a sensitive subject for many families, with more than a third (36%) of over-55s in Scotland saying they have never discussed inheritance with their relatives.
Planned changes to pension inheritance rules
The research comes ahead of planned changes announced by the UK Government in last year's Autumn Budget, which are expected to bring most unused pension funds and death benefits into the scope of Inheritance Tax from April 6, 2027. The proposals are currently the subject of a UK Government consultation.
The survey found knowledge of wider Inheritance Tax rules also remains limited.
Only 15 per cent of over-55s said they understood key Inheritance Tax allowances, including the nil rate band and residence nil rate band, despite these playing an important role in determining whether an estate has an Inheritance Tax liability.
Awareness of estate planning basics
However, awareness was much higher when it came to other aspects of estate planning.
More than eight in 10 (83%) recognised the importance of having a valid will, while 61 per cent said they were aware of the seven-year gifting rule, which can allow certain gifts to fall outside an estate for Inheritance Tax purposes if the donor survives for seven years.
The research also found inheritance remains one of Britain's biggest financial taboos.
Across the UK, a quarter of over-55s said they had never openly discussed inheritance with their family, with privacy, discomfort and the belief it was "too early" cited as some of the main reasons for avoiding the conversation.
Expert commentary on the findings
Amit Joshi, Managing Director of Wealth at Mattioli Woods, said: "These findings show a clear disconnect between the expectation of passing on wealth and the understanding required to do so effectively. While most people recognise the importance of a will, far fewer understand the tax rules and allowances that can significantly impact what is ultimately passed on.
"The reluctance to talk about inheritance is understandable, but it can leave families unprepared at a time when clarity matters most.
"When these conversations are delayed, important financial and emotional decisions are often left until moments of stress or urgency, when it is harder to reflect clearly or act in a coordinated way. That can create uncertainty around intentions, increase the risk of disputes, and lead to avoidable delays in administering estates."
He said families should consider discussing their wishes before they are needed and ensure estate plans are kept up to date.
Regional differences in inheritance discussions
The research also found regional differences in attitudes towards inheritance. Londoners were the least likely to have discussed inheritance with their families, with 44 per cent saying they had never done so, while Scotland recorded the second-highest level of avoidance at 36 per cent.
The findings are based on a YouGov survey commissioned by Mattioli Woods and highlight the importance of understanding planned changes to pension inheritance rules, as well as ensuring wills and wider estate plans remain up to date.
