Back in December 2024, we wrote about what Rachel Reeves’ pension Inheritance Tax (IHT) changes mean for you and explained the new rules.
From April 2027, most unused pension funds and some pension death benefits will fall into scope for Inheritance Tax for the first time.
Under current rules, you can pass unused funds to your chosen beneficiary tax-free on death before age 75. On death after 75, unused pension funds can still pass to your beneficiary, but they will pay Income Tax on it at the highest rate they pay.
These rules had made unused pensions something of a shelter for IHT, but that won’t be the case from next April.
This has prompted many to revisit their estate planning, and while this is a good idea, it’s important not to panic. A calm head is especially important as scammers look to capitalise on the new rules to part retirees from their money.
Scammers will exploit uncertainty and the complexity of new rules
The imminent rule changes have sparked concern among some consumers, and where there is uncertainty, there will be fraudsters looking to take advantage.
The first thing to remember is that the new rules only affect those estates with an IHT liability. If your estate is unlikely to result in an IHT bill, you likely don’t need to change anything.
IHT is generally paid at 40% on the value of your estate that exceeds certain thresholds, which, for the 2026/27 tax year, stand at:
- Nil-rate band – £325,000.
- Residence nil-rate band – £175,000 (applicable when you pass your main residence to a direct descendant on death).
You can also pass any unused IHT allowance to your spouse on death, meaning that if all other criteria are met, you could have £1 million in IHT-free assets as a couple.
Another important thing to remember is that at Globe IFA, we are on hand to help you manage these changes. This might mean revisiting your estate and legacy planning and altering strategies where needed to ensure your plans remain as tax-efficient as possible.
On the surface, the rules are straightforward, but there is complexity there. It is this that scammers will look to exploit.
Pension scams could become more prevalent in the run-up to the April 2027 changes
Pension Age reports that the changes are leading to consumer uncertainty, with:
- 22% of UK adults feeling less confident about their pensions
- 54% worried that beneficiaries could face higher IHT.
Pension cold-calling was banned in 2019. While this won’t stop would-be criminals from calling you out of the blue, it does make their scam easier to stop. Any unsolicited pension call should be treated with extreme suspicion.
They might refer to a pension loophole, offer to “liberate” your pension, or list attractive financial incentives like cashback, one-off “guaranteed” investments, or savings advances.
You can usually only access your pension from age 55 (rising to 57 from April 2028), so anyone claiming they can access your funds sooner could be a scammer. It’s also worth remembering that there are very few guarantees where finances and investment are concerned.
If an offer appears too good to be true, it generally is. And that brings us to the latest pension scams capitalising on upcoming IHT changes.
The signs to look out for and the steps you should take
As we have already said, pension cold-calling is banned in the UK, and this extends to emails and text messages too. If you receive an unexpected message from a company that you don’t recognise or that you are sure you haven’t given contact permission to, be wary.
The company might offer a free “pension review” or the opportunity to invest in a high-return investment. They’ll likely promise the chance for high returns in a scheme that will often be overseas, and so outside UK regulation.
You might also be time-pressured by once-in-a-lifetime offers or imminent closing dates. The scammer hopes you will be forced into making a speedy decision without completing the appropriate checks.
Always take the time to step back, think and consult with professionals. Use the FCA register to check whether a company is authorised. You might also ring them back on a number you find yourself.
Check emails carefully to look for discrepancies in email address formats compared to the address you find online. And remember that AI is helping scams to become more sophisticated and harder to spot.
As always, don’t reply to any unsolicited text message or click links in any email that you are even slightly suspicious of.
Get in touch
Upcoming changes to pensions and IHT will be concerning for many, but knee-jerk reactions could be the wrong choice and leave you susceptible to scams. Instead, take a step back and speak to us about the financial planning strategies we can help you employ to mitigate the impact of the changes.
Please email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help you manage your tax-efficient estate and legacy planning.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning.
