SIPP Commercial Property and the 2027 IHT Change
Written by Scott Jones, founder of CommercialPropertyKiln · Last updated
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A major change is coming for pensions and inheritance tax. From April 2027 unused pension funds, including SIPP-held commercial property, are expected to be brought into the estate for IHT. If you hold property in a pension, this matters.
What is changing
Under current rules, funds left in a defined contribution pension can often pass outside the estate for inheritance tax, which has made pensions a powerful estate-planning tool. From 6 April 2027, unused pension funds, including commercial property held in a SIPP or SSAS, are expected to be brought into the estate for IHT purposes.
Why it matters for property in a pension
For a landlord who deliberately put commercial property into a pension partly for its IHT treatment, this removes a key benefit. Depending on circumstances, the property's value could face IHT at up to 40% on death, alongside any other tax, so the overall position needs reviewing.
What to do
- Review the plan: if IHT efficiency was part of why the property is in the pension, revisit that with an adviser.
- Do not act hastily: taking property out of a pension has its own tax consequences and is not something to do without advice.
- Track the detail: the change is still being finalised, so watch for the final rules. See the law reform tracker.
This is significant, and it is guidance rather than advice. Speak to a regulated adviser about your own position.
Will pensions be subject to inheritance tax from 2027?
From 6 April 2027, unused pension funds, including commercial property held in a SIPP, are expected to be brought into the estate for inheritance tax.
Should I take property out of my pension because of the change?
Not without advice. Removing property from a pension has its own tax consequences, so review the position with a regulated adviser first.