From April 2027, inheritance tax (IHT) will extend to pension assets, but defined benefit (DB) schemes like Lloyds Bank’s largely shield spousal survivors. A pensions expert explains why couples can breathe easy while warning that non‑spouse beneficiaries may see a different picture.

April 2027 IHT rule shift pulls pensions into tax net

The government announced that, starting in April 2027, pension benefits will be counted in the IHT estate, aiming to close avoidance routes that use untapped pension pots. As the source notes, the change is intended to generate significant revenue, though most DB members are expected to escape additional tax.

Spousal survivor benefits in Lloyds Bank DB scheme stay exempt

Steve Webb, a pensions specialist, confirms that transfers between UK‑resident spouses remain exempt from IHT, meaning the reduced survivor pension paid by Lloyds Bank to a widow or widower is not taxable. He adds that there is no requirement to value the inherited DB pension for probate purposes.

Non‑spouse beneficiaries face potential IHT on DB lump sums

If a DB pension’s benefits are directed to a cohabiting partner or children, the exemption disappears. lump‑sum payments—though not relevant to the reader’s case—could trigger IHT, especially where the payment is classified as a death‑in‑deferment or a contribution refund, which HMRC has said may be taxable .

Unclear definition of death‑in‑service versus death‑in‑deferment

The Treasury has clarified that death‑in‑service lump sums are excluded from IHT, but the line between death‑in‑service and death‑in‑deferment remains fuzzy. hMRC has promised detailed guidance, leaving advisors to interpret current rules cautiously.

Who still needs probate paperwork?

Even though the DB pension itself need not be valued,executors must still obtain a grant of probate to deal with other assets such as savings and investments. Professionals advise reviewing nomination forms and confirming survivor benefits well before the 2027 deadline.