What Happens to My SIPP If I Die Before 75? — UK Pension Death Rules 2026/27

A SIPP that passes to beneficiaries when the holder dies before 75 is normally completely free of Income Tax — one of the most valuable tax breaks in the UK pensions system. But the rules are changing: from April 2027, unspent pensions will be pulled into the IHT estate. Here is what happens now and what is coming.

Death Before 75 vs After 75: The Key Difference

Who Inherits Your SIPP

Your SIPP sits outside your legal estate — it does not pass under your will. Instead, the pension provider’s trustees distribute the fund according to:

1. Your expression of wishes (nomination form)
2. Scheme rules
3. Trustee discretion (they are not legally bound by nominations, but usually follow them)

Important: Keep your expression of wishes up to date. An expression of wishes made 20 years ago naming an ex-spouse is likely to be followed unless you update it. Review it after every major life event — marriage, divorce, new partner, birth of children.

Tax Treatment Before Age 75: Worked Example

Robert, age 68, dies with a SIPP of £320,000. He has nominated his wife Emma.

Emma can choose:

• Lump sum: receive £320,000 tax-free immediately
• Inherited drawdown: keep the £320,000 invested and draw income as needed — entirely tax-free
• Combination: take some as a lump sum now and leave the rest in drawdown

Because Robert died before 75, every pound Emma draws from the inherited SIPP is free of Income Tax. If Emma were drawing £25,000/year from the SIPP, she pays £0 Income Tax on it.

Tax Treatment After Age 75: Worked Example

Same scenario, but Robert dies at age 77.

Emma inherits the same £320,000 SIPP, but now:

• Any lump sum she takes is taxed at her marginal rate
• Any drawdown income she takes is taxed at her marginal rate

Emma’s total income is £30,000/year (pension + investment income). She draws £10,000/year from the inherited SIPP. Her total income becomes £40,000 — within the basic rate band. She pays 20% Income Tax on the £10,000 = £2,000/year.

By controlling the drawdown rate, Emma can manage her tax position — drawing only enough to stay within the basic rate band each year.

The April 2027 IHT Reform: What Is Changing

The government announced in the Autumn Budget 2024 that unspent pension pots will be included in the deceased’s estate for Inheritance Tax purposes from 6 April 2027. This is a significant change that affects the long-standing use of SIPPs as an IHT planning tool.

Key points on the reform (as at April 2026 — details may still evolve):

• The pension will be added to the estate and the normal IHT nil-rate band (£325,000) and residential nil-rate band (£175,000) will apply across the combined estate
• There will be an interaction between the Income Tax charge (on death after 75) and the IHT charge — double taxation mitigation rules are expected
• Transfers between spouses and civil partners will remain exempt from IHT as now
• The reform is expected to significantly affect people with large pension pots who were using the SIPP as an estate-planning vehicle

If you have a large SIPP and were factoring IHT planning into your strategy, review your position with a qualified financial adviser before April 2027.

Expression of Wishes: How to Update Yours

1. Contact your SIPP provider and request an expression of wishes form (also called a nomination of beneficiaries form)
2. List each beneficiary by full name, relationship, and the percentage share you wish them to receive
3. Sign and date it — the provider will keep it on file
4. Review it whenever your personal circumstances change

You can nominate individuals, a trust, or a charity. You can nominate more than one beneficiary in different proportions.

See our SIPP guide, pension expression of wishes guide, and inheritance tax guide.

Related Guide

• SIPP UK 2026/27 — Self-Invested Personal Pension Guide, Providers and Rules