What Changes in the 2027/28 Tax Year? Early Planning Guide

Why Look Ahead a Full Tax Year?

Most tax planning is reactive — responding to the current year's rules. But a small number of confirmed policy changes are set to take effect from 6 April 2027, at the very start of the 2027/28 tax year, and they benefit from planning well in advance rather than a last-minute scramble. This guide separates what's confirmed from what's likely but not yet confirmed.

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Confirmed: Pensions Brought Into Inheritance Tax From April 2027

The single biggest confirmed change for 2027/28 is that most unused pension funds and death benefits will be included within the value of a person's estate for Inheritance Tax purposes from 6 April 2027, following the Autumn 2024 Budget announcement. Previously, pensions typically sat outside the taxable estate, making them a popular vehicle for passing wealth to beneficiaries free of Inheritance Tax.

Pension IHT reform 2027 guide

Anyone relying on a pension as a tax-efficient way to pass on wealth should review their estate plan, will, and any expression of wishes well before April 2027, ideally with professional advice given the complexity of how pension schemes and executors will need to handle the new rules.

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Likely to Continue: Frozen Personal Allowance and Bands

The Personal Allowance (£12,570) and basic/higher-rate band thresholds have been frozen since 2021/22, with the freeze extended in a previous Budget through to April 2028. On current legislation, this points to another frozen year in 2027/28 — meaning more people continue to be pulled into higher tax bands purely through wage inflation ("fiscal drag"), without the thresholds themselves rising.

This is a planning assumption, not a guarantee — any Autumn Budget or Spring Statement before April 2027 could change it.

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What to Do Now

1. Review pension and estate planning if you have a meaningful pension pot and rely on it passing free of Inheritance Tax — this is the one confirmed, material change worth acting on ahead of time.
2. Don't over-plan around unconfirmed rate assumptions — treat projected 2027/28 figures as indicative only until HMRC publishes definitive rates.
3. Revisit this each Autumn Budget cycle — the government typically confirms the following tax year's headline rates in the Budget or Statement immediately before it starts.
4. Use current-year allowances fully — ISA, pension annual allowance, and Capital Gains Tax exemption don't carry forward (except pension carry-forward in limited circumstances), so decisions for 2026/27 shouldn't be delayed on the assumption that 2027/28 will offer a materially different position.