What can I start doing to plan for the changes in Inheritance Tax?
Written by Kearney Coffin | Wills, Trusts, tax and Probate team | 10 February 2025
Whilst we still await the full details and legislation of the changes announced in the budget, there are some aspects of your future planning you can start to consider now, to be ready for the upcoming changes to inheritance tax in 2026 and 2027.
Review your pensions
The value of your pension will be subject to inheritance tax from 2027, regardless of whether it passes to into your estate or whether it will be paid directly to your beneficiaries.
This will mean many estates will be significantly larger than previously thought, and may have a larger Inheritance Tax liability.
Whilst we do not yet have the full details on how the pensions will be calculated within the estate, here are some steps you can take to be prepared for this upcoming changes in 2027 for each of your pensions;
- Obtain an up to date value of each pension plan and identify when it will pay out
- Understand whether it will pass into your estate or be paid directly to pension beneficiaries which you have chosen, and consider updating your beneficiaries if appropriate
- You can take advice from a pensions adviser if you need assistance with your pensions and understanding the options available to you
We’d strongly recommend you have your Will reviewed often. Click below to find out more.
Inheritance Tax Reliefs
As there will be changes from 2026 affecting Business Relief, Agricultural Property Relief and Alternative Investment Market (AIM) shares, any person who was relying on these specific reliefs previously should review all the assets which qualified before.
Although we don’t yet have the final details, it looks like Business and Agricultural Property Relief will be capped at £1,000,000 per person, with any excess value charged at 20%.
With AIM holdings, it looks like there will be no tax-free amount and the entire value could be taxed at 20%.
Even though we don’t know the detail yet, it is still worthwhile reviewing your situation, to look at possible options now such as lifetime gifting (of land or shares), creating new share classes and for married couples making sure you both benefit from the relief.
As many of these reliefs will be reduced or capped, many more estates may have an increased Inheritance Tax liability.
Understanding Executor and Solicitor Fees
Choosing the right executors to administer your estate is an important decision. As more estates become chargeable to Inheritance Tax, ensuring you are not paying avoidable additional fees will help to limit the deductions to the inheritance you leave.
If you have named professional executors in your Will, such as a solicitor or accountant, it is important to ask how they will calculate fees and if possible, ask for an estimate based on your current assets so you understand what fees may be paid from your estate when you pass away.
Click here to read our article on Solicitor and Executor fees
At Nash and Co Solicitors, we are proud to be transparent and charge fees for time spent only and we do not charge a value element.
We believe that an estate should only be charged for time spent working on that administration. We do not charge a value element even where our firm is appointed as professional executors
Summary
Whilst we wait for the full details of the upcoming changes, our private client team are ready to help you consider alternative options to mitigate inheritance tax and assist our clients with effective and practical tax planning options.
If you’d like to speak to the team and get their help, please contact us by calling 01752 827067 or emailing enquiries@nash.co.uk. We’d love to talk through your situation and see how we can help you with your future planning.
