Answers · UK 2025/26
Can you inherit a pension in the UK and how is it taxed?
Yes. Defined contribution pensions can usually be passed on to beneficiaries. If the deceased was under 75, the inherited pension is typically tax-free; if 75 or over, withdrawals are taxed as the beneficiary income.
Full answer
Whether a pension can be inherited and how it is taxed depends on the type of pension and the age of the deceased. For defined contribution money purchase pensions, the pension pot does not normally form part of the estate for Inheritance Tax purposes, making them highly tax-efficient to pass on. If the pension holder dies before age 75, the beneficiary can usually receive the funds as a lump sum or drawdown income completely free of income tax. If the holder dies at 75 or older, withdrawals by the beneficiary are taxed as their income at their marginal rate of 20%, 40%, or 45%. Defined benefit final salary pensions typically only pay a spouse or dependant pension rather than a lump sum, and the rules vary by scheme. You must nominate your beneficiaries via an Expression of Wishes form with your pension provider, as without this the trustees decide who receives the funds.
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.