Inheritance Tax Is Changing: Is Your Estate Plan Ready?
Inheritance Tax Is Changing: Is Your Estate Plan Ready?
Inheritance Tax (IHT) is changing, and for many families, business owners and individuals with significant pension wealth, now could be a good time to review existing plans.
With IHT thresholds remaining frozen and important changes affecting business assets and pensions, the value of an estate potentially exposed to IHT may be greater than expected.
Business owners: the rules have changed
From 6 April 2026, changes to Business Property Relief and Agricultural Property Relief mean that 100% relief is generally limited to a combined £2.5 million allowance for qualifying agricultural and business property, with qualifying value above this level generally receiving 50% relief. An unused allowance can also potentially be transferred between spouses or civil partners.
For owners of valuable businesses, this makes succession and estate planning increasingly important.
A business that has grown substantially over many years could now create an IHT exposure that may not previously have been considered.
Pensions: a major change is coming
A further significant change takes effect for deaths on or after 6 April 2027, when most unused pension funds and pension death benefits will be brought within an individual's estate for IHT purposes. Certain benefits, including qualifying death-in-service benefits, are excluded.
For people who have built up substantial pension funds, this could significantly change their overall estate-planning position.
It also reinforces the importance of looking at wealth as a whole. Property, investments, pensions and business interests should all be considered together when assessing potential IHT exposure.
Why reviewing your position now matters
Good estate planning isn't simply about reducing a future tax bill. It's about making sure your wealth passes to the people you want, in the way you want, while ensuring you retain sufficient assets for your own future.
A review could consider:
The current value of your estate
Your potential IHT exposure
Business and succession planning
Pension wealth
Property and investments
Lifetime gifting
Wills and existing estate-planning arrangements
The earlier these conversations take place, the more opportunity there may be to put appropriate planning in place.
Is it time to review your estate?
If you own a business, have a property portfolio, hold significant investments or have built up substantial pension wealth, the recent and upcoming changes make this a sensible time to understand your position.
At ClearTax Group, we help individuals, families and business owners understand their potential Inheritance Tax exposure and explore suitable planning strategies based on their circumstances and long-term objectives.
If you would like to understand how the Inheritance Tax changes could affect you and your family, speak to the ClearTax Group team.
This article is for general information only and does not constitute tax, legal, pension or financial advice. Tax treatment depends on individual circumstances and legislation may change. Professional advice should be sought before taking action.
