Reckon Financial Services x TL4 HNW Magazine

2026 might just be in its infancy, but many wealth advisers are already planning for the major inheritance tax (IHT) reforms set to impact UK-based HNWs and internationally mobile families.  

What’s changing? From April 2027, any unused funds in a deceased’s private pension pot will be included within the wider estate for inheritance tax calculations. The move marks a departure from the outgoing rules, where pensions could be passed on tax-free as a sheltered asset. Doing so granted families a tax-efficient vehicle for wealth transfer, while allowing other assets to be drawn down first to fund retirement.

Soon, the vehicle will be removed, yet beyond the obvious shift in tax treatment, we see the UK’s incoming IHT reform as something much larger. Already, pensions must no longer be considered a peripheral asset but an integral part of estate planning. Let’s take a closer look at why and explore the way forward.

Why IHT reform matters most to mobile HNWs

HNWs with cross-border interests will feel the effects of the IHT reform more acutely because of the scale and complexity of their estate.

Until now, HNWs would typically focus their efforts on preserving pension wealth while drawing on taxable assets to benefit from their pension’s position outside of IHT. As a result, their pension may represent one of the largest portions of their total estate. Layered onto this is the reality of international mobility.

Multiple residences, beneficiaries across countries, and advisors in different jurisdictions all increase the coordination needed at the time of death. This can create friction in processes and stalled decision making, precisely when the new taxation requirements demand speed and clarity. Where pensions now fall into IHT calculations, delays can result in cash flow strain, reporting errors, or postponed distributions. In this reality, complexity becomes a source of risk that threatens to erode the value of the final estate.

Avoid tactical fixes for a structural shift
Through Reckon’s own work with HNW clients ahead ofApril 2027, we often see a tactical response being touted when a structural change is what’s needed. Namely, accelerating pension drawdown.

Calls to accelerate pension withdrawals assume the primary risk is the size of the pot. In reality, the IHT changes impact how pensions are administered and taxed within the estate. Accelerating withdrawals and other tactics like using the maximum gifting allowance may alter headline figures, but they fail to address the administrative and coordination burden spotlighted earlier.

Meanwhile, drawing a pension sooner could increase income tax exposure during the retiree’s lifetime and move investments into less efficient wrappers. And, with a greaterIHT burden, estates may face a liquidity strain when pension benefits must first be allocated to cover the amount owed.

Looking ahead, we believe the success of an estate plan will increasingly be measured by how smoothly it functions at death, rather than solely on how tax efficient it appears on paper.

A more robust route forward

If IHT reforms call for a structural rethink, what might this look like exactly?

·      Treat pensions as a core estate asset. The pensions strategy must now sit alongside trusts, life assurance, succession planning, and business interests rather than being addressed in isolation, or being left entirely in the hands of a pension provider.

·      Design estates for execution and optimisation. Pension planning should now outline what happens at the moment of death: who acts on what task, what information is needed, and how quickly tax liabilities can be met. Doing so can avoid bottlenecks that erode an asset’s value, such as an asset freeze or interest penalties if IHT payments are delayed.

·      Stress-test estates for liquidity. Look beyond tax exposure modelling to understand whether other sources of liquidity exist to cover IHT if pension benefits are delayed or withheld. If liquidity is found elsewhere, executors avoid the need for short-term borrowing to cover tax, which eats into the estate’s total value. Meanwhile, pension benefits can reach beneficiaries sooner.  

·       Map asset timing, not just value. Different assets become available at different speeds. Understanding these timelines can help advisers to avoid delays and prevent executors being forced to make decisions based on deadlines, not sound strategy. Fewer delays mean fewer ongoing costs such as legal fees and interest payments. Meanwhile, understanding when assets are due to be released simplifies the sequencing of payments and allows partial distributions to reach beneficiaries sooner.

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Although April 2027may seem far in the distance, Reckon is already helping our clients to prepare for the IHT reforms, with an equal focus on execution and efficiency. Now’s the time to simplify cross-border structures, integrate pensions into the wider estate and succession architecture, and recognise the changing role of pensions beyond tax treatment. Doing so can preserve an estate’s value following death, making sure as much of the departed’s hard-earned wealth reaches those closest to them.