Answers · UK 2025/26
How is a UK pension taxed if I die after 75?
If you die after age 75, beneficiaries pay Income Tax at their marginal rate on pension withdrawals (rather than receiving them tax-free as is the case before 75). From April 2027, pensions also become subject to Inheritance Tax — a major change.
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UK pension death benefits taxation 2025/26 (changing April 2027). Current rules (pre April 2027): Death before age 75 — beneficiaries receive defined-contribution pension benefits free of Income Tax, subject to the £1,073,100 Lump Sum and Death Benefit Allowance (LSDBA). Death after age 75 — beneficiaries pay Income Tax at their marginal rate (20%/40%/45%) on any drawdown income or lump sums. NO IHT either way (currently). From 6 April 2027: most pensions also enter the estate for Inheritance Tax (40% above £325,000 NRB + £175,000 RNRB). This effectively double-taxes after 75: IHT first, then Income Tax on withdrawals. Combined effective rate for higher-rate beneficiaries could reach 64-67%. Beneficiary options for DC pensions: take as lump sum (subject to LSDBA + future IHT); take into beneficiary's drawdown (taxable income as drawn); take as annuity (taxable income). Spouse exemption: passing to a spouse/civil partner is generally IHT-free even post-2027. Discuss with a regulated adviser — strategies include drawing pension earlier, accelerating ISA/pension gifts (7-year rule), buying life-time annuities, or using charitable bequests.
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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.