Pensions and the Autumn Budget 2026: What Changed?

Published 30 March 2026 • 9 min read

The Autumn Budget brought several significant changes to pension rules that will affect savers, retirees, and anyone planning for the future. From the landmark decision to bring pensions into inheritance tax from April 2027 to adjustments in contribution limits and State Pension uprating, here is a comprehensive breakdown of what changed and what it means for you.

Pensions and Inheritance Tax: The Headline Change

The most significant announcement was the decision to bring pension pots within the scope of inheritance tax (IHT) from April 2027. Under the current rules, defined contribution pensions sit outside your estate for IHT purposes, making them an exceptionally tax-efficient way to pass on wealth. That advantage is being removed.

Key details of the change include:

• DC pension pots will be added to your estate when calculating IHT liability
• The nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen, meaning more estates will be caught
• Death before 75 — beneficiaries currently receive pension funds completely tax-free. From 2027, IHT may apply first, then income tax on withdrawals
• Potential double taxation — industry groups have raised concerns that pension funds could face both IHT and income tax, though HMRC has signalled it will provide a credit mechanism

Annual Allowance and Tax Relief

The annual allowance — the maximum you can contribute to pensions and receive tax relief — remains at £60,000 for the 2026/27 tax year. However, the Budget confirmed important details around the edges:

• The tapered annual allowance continues to reduce the limit for those earning above £260,000, with a minimum allowance of £10,000
• The money purchase annual allowance (MPAA) stays at £10,000 for those who have already accessed pension savings flexibly
• Carry forward rules remain unchanged, allowing you to use up to three years of unused allowance from previous tax years

State Pension Uprating

The Budget confirmed that the triple lock will be honoured for 2026/27, increasing the full new State Pension by 4.1% to £11,973 per year (£230.25 per week). The basic State Pension rises to £9,175 per year.

However, a growing concern is the interaction between State Pension increases and the frozen personal tax allowance. With the personal allowance stuck at £12,570 until at least 2028, the State Pension alone is now just £597 below the tax-free threshold. Another year of triple lock increases will push many pensioners into paying income tax on their State Pension for the first time.

Summary of Key Budget Changes

What Should You Do?

The Budget changes require different actions depending on your circumstances:

• If you are using your pension for estate planning — review your strategy urgently with an adviser before the April 2027 IHT changes take effect. You may want to consider drawing down pension funds and gifting, or restructuring your estate plan
• If you are a higher earner — use end-of-year contributions and carry forward to maximise tax relief while the rules remain favourable
• If you are approaching retirement — model the tax impact of different withdrawal strategies, particularly the interaction between State Pension, personal allowance, and any private pension income
• If you are self-employed — check whether you are claiming the correct pension tax relief through self-assessment

Key Takeaways

• Pensions will be included in estates for IHT from April 2027 — the biggest change to pension death benefits in years
• The annual allowance remains at £60,000 and carry forward rules are unchanged
• The State Pension triple lock was honoured, but the frozen personal allowance creates a growing tax trap for pensioners
• The net pay anomaly fix will begin helping low-earning workers get fair tax relief
• Anyone relying on pension IHT exemptions for estate planning should seek advice before April 2027