Copy article

Adviser Launches Inheritance Tax Calculator to Reveal the True Cost of Labour’s Proposed Pension Tax Changes

ended 22. October 2025

Leading independent financial adviser Scott Gallacher of Rowley Turton has launched a new Inheritance Tax (IHT) Calculator, allowing people to assess the impact that Labour’s proposed changes to the taxation of pensions could have on their estates.

Under the proposals, pensions — which are currently exempt from Inheritance Tax — may be brought into the IHT net. For many savers, particularly those with larger pension pots, this could lead to a significant increase in the tax burden faced by their beneficiaries.

For example, a typical £400,000 pension fund could, from April 2027, create a potential £160,000 IHT liability.

The Rowley Turton IHT Calculator provides a quick and accessible way for users to estimate their potential IHT liability under both the current rules and the proposed changes.

Scott Gallacher, Director at Rowley Turton, said:

 “Our new calculator is designed to help people understand the potential impact of bringing pensions under the Inheritance Tax net on their family’s finances and start conversations about what IHT planning steps may be appropriate.”

The calculator is freely available at https://rowleyturton.com/calculators/iht-calculator.html

We are inviting other financial advisers, industry experts, and commentators to share their perspectives:

  •  Are Labour’s proposed IHT changes on pensions a major issue for clients?
  •  Do clients fully understand the potential impact?
  •  And most importantly, what practical steps can they take now to prepare?

 

4 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Scott GallacherVerified
Director at Rowley Turton
These proposed changes could fundamentally alter how pensions are viewed in estate planning. For decades, pensions have been one of the most tax-efficient and flexible ways to pass on wealth — so including them within the Inheritance Tax net is a real game changer.

What’s worrying is that many people simply don’t realise how big a difference this could make. For example, a £400,000 pension could suddenly carry a £160,000 IHT liability. That’s a major hit to a family’s inheritance.

We created this calculator to help people quantify the potential impact for themselves — and to encourage them to start the conversation with their financial adviser or accountant now, rather than waiting until the rules change.
Copy

Editor
Eamonn PrendergastVerified
Chartered Financial Adviser at Palantir Financial Planning Ltd
Tools like this are crucial the proposed IHT changes would fundamentally alter how pensions are viewed in estate planning. For years, pensions have been one of the most tax-efficient ways to save for later life, but including them in the inheritance tax net risks punishing prudence rather than wealth. For many clients, it’s not just about the size of the pot but the principle they’ve already paid income tax on their earnings and saved responsibly under the rules. The potential IHT exposure on pensions could create confusion and distrust, especially for those nearing retirement. This reinforces why early, holistic planning is essential reviewing estate values, exploring trusts, gifting strategies, and even life insurance can all help mitigate the impact if these proposals go ahead.”
Copy

Editor
Anita WrightVerified
Chartered Financial Planner at Ribble Wealth Management
Many clients have a general awareness that Labour intends to bring most unspent pension funds into the scope of inheritance tax; fewer understand the scale or timing. Those who transferred from final-salary to defined-contribution arrangements typically did so for three reasons: unusually high cash-equivalent transfer values; the flexibility to support children during life via ad-hoc withdrawals and gifts; and the then-perceived IHT efficiency of discretionary pension death benefits. In that context, many now feel the promise of passing wealth down the generations IHT-free has been quietly withdrawn after they acted in good faith. What was a carefully constructed legacy plan now needs to be reworked—not because their goals have changed, but because the rules have. That concern is amplified for deaths after age 75 when beneficiaries may face both IHT on the fund and income tax as they draw it. Methodical, forward-looking planning will protect families far better than last-minute tactics
Copy

Editor
David StirlingVerified
Independent Financial Adviser at Mint Wealth
This calculator lays bare the serious challenges clients will face when pension rules shift in April 2027. Anyone approaching retirement with a sizable pension pot needs to act now to start IHT planning. This takes time and the sooner you start, the more options you have. Labour’s new rules are pushing people toward trusts and complex estate structures just to shield their wealth from the heavy tax hit these changes will bring.