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This article is for general guidance only and is not financial or professional advice. Any links are for your own information, and do not constitute any form of recommendation by Saga. You should not solely rely on this information to make any decisions, and consider seeking independent professional advice. All figures and information in this article are correct at the time of publishing, but laws, entitlements, tax treatments and allowances may change in the future.
There’s less than a year to go before a popular form of pension arrangement will, for the first time, be included within estates for inheritance tax (IHT) planning purposes.
The announcement was made in the 2024 Autumn Budget. In the interim, the decision has generated much confusion and consternation amongst people who have felt the need to review their retirement plans because of the change.
What’s more, the uncertainty is also allowing fraudsters to exploit people’s concerns. Here’s our guide on how to steer clear of the IHT scammers who’ve got their sights trained on your pension.
Major changes to IHT rules are due to come into force from 6 April 2027. From that date, the value of unused defined contribution pensions, the mainstay of many workplace and private pensions arrangements, will - for the first time - be included in estates for IHT purposes.
According to research from Standard Life, over half of pension savers (54%) said they are worried their loved ones could face a higher tax bill as a result. The firm also warns that concern surrounding the changes could lead to a rise in fraud, as criminals exploit people who are worried or unsure about the new rules.
The average amount lost to pensions fraud already stands at £48,129 per day, according to the Pension Scams Action Group. Not only is this an eye-watering amount, but the financial impact that fraud can have on victims can be devastating.
Here’s what’s changing, why the combination of IHT and pensions fraud is on the rise, and how you can spot the danger signs and swerve becoming a victim.
The latest HMRC figures show that estates paid £700 million in IHT in April 2026. Only 4% of estates currently fall into this category, but that proportion could rise significantly next year after the rule change.
According to Vanguard, the government estimates that of around 213,000 estates with inheritable pension wealth in the tax year 2027-28, around 50,000 will either be brought into the scope of IHT for the first time, or pay more than they would have before the changes.
That said, most people spend their pension money in retirement, which means there’s often not much, if any, pension savings left to pass on. The usual IHT ‘nil-rate band’ of £325,000 will still apply (with further allowances available subject to conditions). If you’re married or in a civil partnership and leave your pension to your partner, there’s no IHT to pay on first death.
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Standard Life warns that periods of change and uncertainty can increase the risk of pension scams, especially those where people are urged into decisions without support from trusted sources.
Its research shows that more than half of savers are concerned about the upcoming changes to IHT, while more than one-in-five (22%) said they feel less confident about their pensions overall as a result.
Mike Ambery, retirement savings director at Standard Life, says: “It’s exactly this kind of confusion that scammers are quick to exploit, often presenting so‑called ‘solutions’, such as moving savings into unfamiliar or overseas arrangements that claim to avoid tax.”
Clare Moffat, pensions and tax expert at Royal London, agrees. She says: “Sadly, scammers are quick to ‘piggy back’ on legitimate events to attempt to trick people into transferring money from their pensions or sharing personal information.
“The change to include pensions within inheritance tax from April 2027 has created concern and uncertainty from the general public and that in turn creates a perfect opportunity for scammers.”
Ian Futcher, financial planner at Quilter, says it’s difficult to point to any actual evidence of an increase in scams, but intuitively he suspects they’re on the rise.
He explains: “Any change in pension or tax legislation tends to create an opportunity for scammers. When rules shift, particularly around complex areas like inheritance tax and pensions, fraudsters often move quickly to position themselves as offering ‘urgent’ or ‘insider’ solutions, pressuring individuals into making hasty decisions.”
Fraud involving pensions and IHT can manifest itself in different ways. But according to Ian Futcher: “with pensions in particular, the risk is that people are encouraged to withdraw funds or transfer assets under false pretences”.
For example, this could be a criminal posing as a pension or IHT adviser and urging someone to withdraw their pension funds to protect their wealth from future tax changes. Once the person has made the withdrawal and transferred their money to a different account, it may be lost forever to criminals.
Theft to one side, Futcher warns that victims can also suffer from other financial consequences in going through with what turn out to be fraudulent actions. These include: “significant tax liabilities, penalties, or irreversible financial harm”
IHT and pensions scammers prey on confusion and will often promise solutions such as tricks to lower or avoid this tax altogether. These tend to follow a similar pattern and some of the most common traits include:
Criminals are constantly evolving and looking for new ways to con people out of their money.
Mike Ambery says: “There’s also a risk of fraudsters making greater use of artificial intelligence and deepfake tactics to make approaches look and sound more convincing. So when it comes to pensions, slowing down and asking a few extra questions can make a real difference.”
If you’re worried about potential scams, ask yourself the following five questions before taking out any action.
1. Who are you talking to? Always check and double check you know exactly who is at the other end of the phone or email. Confirm the firm or adviser’s credentials by checking them against the Financial Conduct Authority’s firm checker. Never just take their word for it.
2. Are you impacted by the IHT changes? If you’re concerned about the upcoming changes, speak to your pension provider and ask for advice. If you are expecting your IHT bill to rise, a genuine financial adviser can also help. Being informed about your finances lowers the risk of you becoming a victim of fraud.
3. Is it a genuine person or an AI fake? Scammers could be using artificial intelligence or ‘deepfake’ technology to convince you they are a real person or company. Always double check, with the company’s official contact details, that you’re speaking to a legitimate person.
4. Have you been approached on social media? It’s hard to see what’s genuine and what’s a scam on social media and it’s a place where scammers often contact their victims. If you’re being approached on any social network, be wary and always independently verify the details you’re being given.
5. Do you know if it’s a scam? Keeping up to date with the latest pensions and IHT scams can give you a head start against the fraudsters. Common scams are often published on online resources such as ScamSmart, Report Fraud and the National Cyber Security Centre. The latter can also help if you’re concerned you may have been approached by a scammer.
IHT has been historically seen as a tax for the very wealthy, but from next year more people are set to pay it.
It can be a complicated area. Many people will prefer to seek professional advice from a financial or legal adviser when looking at their retirement planning in relation to this tax.
Paying for this type of advice can be extremely useful, especially as there are lots of ways you can reduce your IHT liability, from giving regular gifts to setting up a trust.
However, it’s crucial if you’re going down the advice route to make the correct checks so you find a legitimate professional for financial advice, and not a fraudster.
The risk of fraud in relation to the upcoming changes “underlines the importance of approaching any unsolicited contact with caution and taking regulated financial advice before making changes,” warns Quilter’s Ian Futcher.
“Legitimate planning around tax changes takes time and careful consideration, and any suggestion that you need to act immediately should be treated as a red flag,” he adds.
Explore the essentials of UK inheritance tax, including nil rate bands, gifting rules & other exemptions.
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