Key takeaways
Regulatory changes reshape SIPP and SSAS landscape
Firms must prepare for stricter compliance and oversight.
Enhanced governance and reporting requirements ahead
Early planning helps avoid operational and financial risk.
Proactive adaptation secures client trust and growth
Updating processes now ensures resilience and competitiveness.
Professional services firms such as accountants, consultants and financial advisers are frequently involved in advising clients on pension arrangements such as Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSASs).
These structures offer flexibility and a high degree of control over scheme assets, but they also present legal and regulatory challenges that require specialist input. Looking ahead, a key issue for professional services firms and their clients to be aware of is the forthcoming changes to the inheritance tax treatment of pensions.
Under current plans, from April 2027, unused pension funds and death benefits will, in some cases, be brought within the scope of inheritance tax. Our team is actively monitoring the progress of this legislation so that we are well placed to advise clients on the implications for pension arrangements.
Inheritance tax and pensions: what’s changing in 2027?
From 6 April 2027, significant changes to the inheritance tax (IHT) treatment of pensions will come into effect.
Under the current rules, unused pension funds, including those held in SIPPs and SSASs, typically fall outside an individual’s estate for IHT purposes. This has made pensions a valuable estate planning tool, allowing wealth to be passed on tax-efficiently. However, from April 2027, unused pension pots and death benefits will be brought within the scope of IHT and treated as part of the deceased’s estate unless it is covered by one of the exemptions.
This means that where the total value of an estate, which will include pension funds, exceeds the nil-rate band (currently £325,000) inheritance tax at 40% may apply. The change is expected to affect tens of thousands of estates for the first time.
The implications are wide-ranging. Personal representatives will be responsible for reporting pension death benefits and paying any IHT due. Where pension beneficiaries differ from those named in a will, disputes may arise and estate administration could become more complex. For clients with SSAS or SIPP arrangements, it will be especially important to review expression of wishes forms and ensure that pension nominations align with broader estate planning objectives.
While the legislation is still being finalised, the direction of travel is clear. These changes could reduce the tax efficiency of pensions as a wealth transfer tool and may prompt clients to reconsider how and when they draw down their pension savings.
Our pensions team is monitoring developments closely. If you or your clients are considering how these changes might affect existing SIPP or SSAS arrangements, now is the time to start the conversation.
How Hill Dickinson works with firms on pensions issues
The pensions team at Hill Dickinson provides focused legal support to help firms navigate these complexities and deliver value to their clients.
Our work includes drafting and interpreting scheme rules, which are the central documents to understanding member entitlements and trustee powers. We assist clients in reviewing and updating scheme documentation to ensure it is fit for purpose, legally robust, and aligned with current regulatory expectations. In addition, we provide advice in relation to trustee duties and the legal aspects of scheme governance.
We have extensive experience advising on disputes in relation to SIPP and SSAS arrangements. These issues can be particularly sensitive and complex given they are often centred around a family business, and our team offers clear, pragmatic guidance to help resolve matters efficiently. This may be through internal processes and providing advice on the proper interpretation of the scheme’s rules or where necessary, by guiding clients through dispute resolution channels.
When advising on SIPP or SSAS matters in the context of corporate transactions, our focus is on ensuring that the pension arrangement is appropriately separated from the entity post-completion. This can involve reviewing and updating scheme documentation and advising on the scheme structure post transaction. We work with our colleagues in our tax and property teams where appropriate, ensuring clients receive joined-up support across all relevant disciplines.
