UK Pension Inheritance Tax Changes: Five Questions British Expats Should Ask Before April 2027
Quick Summary
- From 6 April 2027, most unused UK pension funds and pension death benefits will be included in a person’s estate for UK inheritance tax purposes.
- Living in France, Spain, Poland or elsewhere in Europe does not, by itself, take a UK pension outside the new rules.
- HMRC has confirmed the broad framework, but says a further technical note expected in autumn 2026 will address international issues.
- Your UK residence history, the location of each pension scheme and the circumstances of your beneficiaries may all matter.
- There is useful preparation you can do now: identify every pension, review your beneficiary nominations and make sure your family can find the paperwork.
- Avoid making a large pension withdrawal solely because of the April 2027 deadline. First establish the tax position in every country involved and how the withdrawal fits your retirement plan.
If you are a British expat with a UK pension, you may have heard a worrying shorthand version of the new rules: “Pensions will be subject to inheritance tax from April 2027.”
That is broadly right, but it does not tell you whether tax would actually be due on your pension, what your beneficiaries might receive, or what you should do today.
The change is already law. For deaths on or after 6 April 2027, most unused pension funds and pension death benefits will be brought within the value of the deceased person’s estate for UK inheritance tax purposes. That does not mean every pension will produce a tax bill. The value of the estate, available allowances and any applicable exemptions or reliefs still matter.
For British people living permanently in Europe, the difficult part is often the interaction between the UK rules and life in another country. HMRC’s second technical note says a third note, expected in autumn 2026, will cover international issues, alongside further detail on the interaction between inheritance tax and income tax. Until then, it is important to distinguish what we know from the questions that still need practical clarification.
1. Does Living Outside the UK Change Which Pensions Are in Scope?
Yes, but the answer depends on more than your current address.
HMRC’s published position distinguishes between people who are long-term UK residents for inheritance tax purposes and those who are not. Broadly, pensions in UK-established schemes can be in scope even if the member has lived abroad for years. For a long-term UK resident, qualifying pensions established outside the UK can also be in scope.
“Long-term UK resident” is a defined tax status. You should not assume that you stopped being one on the day you moved abroad: depending on your history, the status can continue for a period after departure. Equally, someone who left the UK many years ago may have a different position from a recent arrival in the EU.
The broad rules are known. The task for each expat is to establish their own UK residence history and confirm where each pension scheme is established. That is particularly relevant if you have both UK pensions and an overseas pension arrangement.
Are you wondering how the upcoming UK pension IHT changes will affect you as a UK expat in the EU?
Let’s discuss your specific situation and how I can help you.
Speak with a cross-border pension expert2. What Will the Person Handling Your Estate Have to Do?
Under the new rules, your personal representatives, usually the executors named in your will or the administrators of your estate, will be responsible for reporting and paying any UK inheritance tax due on pension benefits.
They will need to identify your pension schemes and obtain the information required to deal with the estate.
Think of someone who retired to Spain 15 years ago and still has five UK pensions from different employers.
Their spouse may know about the SIPP they use for retirement income, but not a deferred workplace pension or an older personal pension.
Finding those arrangements after a death takes time, and each provider must be contacted.
Regulations on information sharing have now been made, and HMRC’s second technical note explains more of the process. Supporting guidance and tools are still to follow. The practical lesson is already clear: a complete pension record will make your family’s job easier.
3. How Will Inheritance Tax Be Paid if the Pension Has Not Been Distributed?
This is an important question for families whose wealth is concentrated in pensions.
HMRC has set out mechanisms that can allow personal representatives, in certain circumstances, to ask a registered pension scheme to withhold some benefits or pay inheritance tax directly from the pension. These are subject to rules; withholding is not intended to be a routine precaution for every estate. The same notice mechanisms do not apply to qualifying non-UK pension schemes.
The law and information-sharing framework provide a starting point. What families and advisers still need is the full supporting guidance on how the process will work smoothly in less straightforward cases, including estates administered across borders.
4. What if Your Pension Beneficiary Lives in Another Country?
A UK inheritance tax calculation is only one part of the answer.
Your spouse might live with you in France. An adult child might live in Ireland or Canada. The way a pension death benefit is paid, and how it is taxed in the beneficiary’s country of residence, can affect the amount they ultimately keep.
There may also be UK income tax questions. HMRC has said that its expected autumn technical note will give further guidance on the interaction between inheritance tax and income tax.
It would be premature to assume that one simple tax calculation gives the complete answer for an overseas beneficiary.
5. Should You Withdraw Money Before April 2027?
Do not let the date make the decision for you.
Taking money out of a pension may change the form in which you hold it, but it does not automatically improve your family’s overall tax position.
A withdrawal could give rise to income tax in the UK or your country of residence.
Once withdrawn, the money becomes part of your wider finances, with its own estate-planning consequences.
There may be sound reasons to change how you draw retirement income.
That decision should start with how much you need, the tax treatment where you live, your other assets and the needs of the people you hope to leave money to.
What To Think About Now
- List every pension you hold. Include the provider, policy number, scheme type and current value. Ask the provider to confirm where the scheme is established if that is unclear.
- Review your beneficiary nominations. Check that each provider has your current wishes and contact details. A nomination is important, although the scheme’s rules and decisions about benefits still matter.
- Record your UK residence history. Note when you left, any later returns and your residence in each UK tax year. This will help an adviser assess your inheritance tax position.
- Make the information accessible to your executors. Tell them where to find your pension list, wills and adviser details. They should not have to reconstruct your finances from old emails after your death.
- Review withdrawals as part of a full plan. Check the likely UK and local tax consequences before taking a lump sum or changing your drawdown strategy.
Frequently Asked Questions
Will my UK pension be subject to inheritance tax if I live in Spain, France or Poland❓
It may be included in your estate under the new UK rules even though you live abroad. Whether inheritance tax is actually payable depends on your full estate, residence history, the scheme and any available allowances or exemptions. Your country of residence may also have its own rules to consider.
Does the change apply to deaths before 6 April 2027❓
No. HMRC says the new rules apply to deaths on or after 6 April 2027. If a member dies before that date, the current rules apply even if the pension benefits are paid to beneficiaries afterwards.
Are QROPS outside UK inheritance tax❓
You cannot assume so. HMRC says qualifying non-UK pension schemes can fall within the new rules. The outcome depends in part on whether the member is a long-term UK resident for inheritance tax purposes and where the scheme is established. An individual arrangement needs to be checked against the precise rules that apply to it.
Will my executors have to contact all my pension providers❓
They will need to take reasonable steps to identify relevant pensions and obtain the information needed for the estate’s inheritance tax position. Keeping an accurate pension list can make a substantial difference, especially if you have moved countries or changed employers several times.
Should I take my tax-free cash before April 2027❓
There is no universal answer. The fact that a pension may enter the inheritance tax calculation does not make an immediate withdrawal beneficial. Check the tax treatment of the payment where you live, what happens to the withdrawn money and whether taking it supports your retirement income plan.
When will HMRC clarify the international cases❓
HMRC’s second technical note says technical note 3 is expected in autumn 2026 and is expected to cover international issues. Further guidance and supporting materials are planned ahead of implementation in April 2027. An expected publication date is a timetable, not a guarantee that every individual cross-border question will be settled at once.
Further Reading
📚 Are UK Pensions Now Liable for Inheritance Tax? The New Pension IHT Rules Unpacked
📚 Do UK Pension Providers Still Owe Consumer Duty Protections to British Expats?
📚 Should I Consolidate My Pensions? A Guide for British Expats
📚 Inheritance Tax on Pensions for British Expats: May 2026 Update
Real People, Real Results
“There is no shortage of people offering financial advice to Brits living overseas and it is, unfortunately, extremely hard to sort the wheat from the chaff. I did a fair bit of due-diligence before finally deciding to put my trust in Ross and I have not been disappointed.
He is a true professional who has provided valuable advice and has delivered on everything he said he would and I have no hesitation in recommending him to others.”
— Ian Scattergood
The Bottom Line
The April 2027 pension inheritance tax change is real, and British expats with substantial UK pensions should prepare for it. Preparation means getting the facts together now: identify your pensions, understand your residence history, review your beneficiaries and make sure your executors can find the information they will need.
It does not mean rushing to withdraw pension money before HMRC publishes its further guidance on international cases. The best decision will be the one that works for your retirement, your family and the tax rules in all the countries that matter.
Talk to an Expert
The April 2027 pension inheritance tax changes could have important consequences for British expats with UK pensions. Living overseas does not, by itself, remove a UK pension from the new rules, and your residence history, pension arrangements, beneficiaries and wider estate may all affect the eventual position.
I’m Ross Naylor, a UK-qualified Chartered Financial Planner with nearly 30 years’ experience helping British expats navigate the complicated overlap between UK pensions, inheritance tax, retirement income and cross-border estate planning.
I firmly believe your location in the world should never be a barrier to expert, impartial and transparent financial advice you can trust.
If you are concerned about how the 2027 pension inheritance tax changes could affect you or your family, the priority is not to rush into withdrawing pension money. It is to understand which pensions may be affected, your UK residence history, who your beneficiaries are and how the rules interact with the country where you live before making any irreversible decisions.
Book a confidential consultation