The calculator highlights how different tax rates can affect the final amount passed on to loved ones and why the timing of pension withdrawals can have a significant impact on family wealth.
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Both options result in the same net amount for beneficiaries
Pensions have traditionally been one of the most tax-efficient ways to pass wealth to future generations.
However, proposed changes to inheritance tax rules mean it’s becoming increasingly important to understand how pension funds may be taxed when they’re eventually passed on.
This calculator helps you compare the potential impact of leaving money in a pension versus withdrawing it, so you can see which approach could result in more wealth reaching your beneficiaries.
This calculator is designed to help you:
To use this calculator all you’ll need to do is enter:
This calculator is intended as a guide and uses simplified assumptions to illustrate potential outcomes. Tax rules can change, and the right approach will depend on your individual circumstances.
If you’re considering making significant pension or inheritance planning decisions, it’s always worth speaking to a qualified financial adviser before taking action.
Inheritance tax might have to be paid if a person’s “estate” is worth over £325,000 when they die.
An estate includes everything a person owned, such as:
If you give your home away to your children or grandchildren, the threshold increases to £500,000. Currently, the inheritance tax rate is set to 40%.
New IHT rules are coming in and will affect how you can pass on pension wealth.
From 6 April 2027, pensions will be included as part of your estate when you pass away. This includes workplace pensions and self-invested personal pensions (SIPPs).
The exact details of how pensions will be affected are still to be confirmed. But we’ve rounded up everything we know so far in this inheritance tax video.
