UK annuities have recorded a sharp rise in sales in recent months, with more retirees using them to reduce their inheritance tax (IHT) liability.
Insurer Standard Life identified an increase in the percentage of its customers, aged 75 and over, taking out annuities in the first half of 2026. This share of their client base is estimated to have quadrupled to 5.5% since 2024. The average annuity premium has gone up by 14% over the last 12 months, up from roughly £91,000 in 2025 to in excess of £100,000 so far this year.
If you are considering bequeathing a pension to a loved one, you can do so in the knowledge that it is exempt from IHT. Regular ‘gifts’ to beneficiaries can be made from the annuity as ‘surplus income’, meaning they are unaffected by death duties. This news is likely to be significant for those who are inheritance tax planning in Oswestry and other areas.
The increased appeal of annuities in recent months has in large part been driven by higher interests but also by public awareness of looming changes to inheritance tax, which are due to take effect from April 2027. Thereafter, unused pension pots will be absorbed into IHT, with significant implications for potentially tens of thousands of people.
The new regime has prompted a rethink in terms of how retirees manage their pots. The evidence confirms that people are reviewing their decisions more regularly, and revisiting how to best use their pension savings.
