IHT on Pension Pots after April 2027

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82000317#Comment_82000317

The £200k to the kids gets added to the rest of the estate and uses up the £325k NRB plus up to £175k residence NRB if the house passes to them. 

The OP was talking about £100K each to two children, so £200K in total. So it would only use up part of the £325K nil rate band.

The bit people often miss: if you die after 75, the kids pay IHT on the pot AND income tax when they draw it. For a higher rate heir that's an effective rate of over 64%.

That is really a worst case scenario. Even if an estate is liable for IHT, it would normally only be payable on part of the pension pot, not all of it.

Plenty of advisers are now saying spend the pension first, leave the ISA and house behind.

Different scenarios will apply to different people, although there seems to be a consensus to make sure all the tax free cash is extracted before age 75.