Almost a fifth (19%) of high-net-worth individuals (HNWIs) aged 55 and over are unaware that unused private pensions will be liable for inheritance tax (IHT), Charles Stanley research has found.

From 6 April 2027, changes to IHT rules will affect how pension pots are treated upon death, with unused private pensions being included as part of an individual’s estate.

Charles Stanley said this could bring millions more estates within the scope of IHT.

HNWIs aged over 55 are the most likely to be affected by these pension changes, yet are the least aware. While 51% said they are somewhat aware of the changes coming into effect, they have only heard of them and don’t know exactly what they are or what they mean.

Stanley Charles said this means a considerable number of people are at risk of paying more IHT than expected, leaving beneficiaries of estates exposed to higher tax.

Despite being aware of the changes coming into effect, 25% of those aged 55 and over are not actively taking any action to account for the pension changes. A further 13% have not taken any action yet but plan to, while 8% don’t know what they can do to account for the upcoming changes.

Of those taking action, 15% said they are spending money from their pension to reduce their IHT liability, while 14% said they are more focused on alternative tax-efficient savings vehicles, such as ISAs. Thirteen per cent have changed their financial plans to reduce the possible IHT burden they face, while the same proportion have sought professional advice on what they should do.

When asked about these potential changes, Charles Stanley stated that sentiment among those aged 55 and over was largely negative. A third (32%) said they feel disappointed by the changes, while others felt frustrated (23%) and disillusioned (20%).

Director for financial planning at Charles Stanley, Harry Bell, said: "Pensions are among the most valuable assets people hold, yet many remain unaware of how upcoming reforms could affect their estate planning. From April 2027, unused pension pots will fall within the scope of inheritance tax, which could significantly increase liabilities for families.

"While there’s no need for knee-jerk reactions, understanding the implications and planning ahead is essential. These changes alter long-standing assumptions about retirement planning, so taking advice now is crucial to avoid unexpected tax bills and ensure your wealth supports both your income needs and your legacy."

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