Inheritance tax

Inheritance tax planning: keeping what you've built in the family

Forty per cent is the number people know. What they don't know is whether it applies to them, and by the time anyone finds out, they're not around to do anything about it.

HMRC collected £8.5bn in inheritance tax in 2025/26. That's a fifth consecutive record, and roughly double the take of twenty years ago. Not because people got richer. Because the thresholds stopped moving while house prices didn't.

The rule that just changed everything

For decades, a pension was the best thing you could leave behind. It sat outside the estate, passed to your children largely untouched, and the sensible advice was to spend everything else first and leave the pension alone.

That advice is now wrong.

Finance Act 2026 became law in March. From 6 April 2027, most unused pension funds and death benefits count as part of your estate for inheritance tax. Death in service benefits are excluded, and anything passing to a spouse, civil partner or charity keeps its exemption. Everything else is in.

The government expects around 10,500 estates to face a charge in the first year that wouldn't have before.

If you've been drawing down ISAs and general investments while leaving the pension to grow, that strategy was built on a rule that no longer exists. It's worth knowing that before April 2027 rather than after.

Where the bills come from

The house. The nil-rate band has been frozen at £325,000 since 2009. Add the residence nil-rate band and a couple can pass on up to £1m, which sounded generous when it was set and sounds different now. A three-bedroom house in Sussex does a lot of the work on its own.

Gifts made too late. Give money away and survive seven years and it's outside your estate. Survive three and it isn't. Timing is most of the game, and the game rewards starting early.

Assets nobody valued. Business interests, a second property, a share of something inherited years ago. Estates are often larger than the people in them believe.

What we do about it

We work out what your estate is worth, what it would be taxed, and what can be done about the gap.

Sometimes that's gifting, structured so you don't give away money you'll need. Sometimes it's a trust. Sometimes it's life cover written in trust to pay the bill so the family doesn't sell the house to settle it. Sometimes it's changing which pot you draw on first, which is the question the 2027 change has reopened for almost everyone.

And sometimes it's telling you that you don't have a problem, and that the money you were about to spend on solving it is better spent living.

The conversation nobody starts

Most families never discuss this. The parents don't want to seem morbid. The children don't want to seem grasping. So everyone waits, and the planning that needed twenty years to work gets six months.

We can sit in that conversation with you, or run it. It's easier with someone in the room who isn't inheriting anything.

What it's actually for

Not tax efficiency. That's the mechanism.

It's the house staying in the family instead of being sold to pay a bill. It's your children getting what you meant them to have, at a point in their lives when it changes something. It's knowing you've dealt with it, so nobody has to work it out in the fortnight after your funeral.

That's what a good plan is for.