Recent budget announcements have set the stage for significant changes in the world of Inheritance Tax (IHT), with impacts likely to be felt by many families over the coming years. The government’s decision to freeze the IHT nil rate band and residence nil rate band thresholds until 2030 means that as property values continue to rise, more estates could be caught in the inheritance tax net.
What’s Changing and Why It Matters
Alongside the freeze on thresholds, changes to tax relief on certain assets and adjustments to pension rules are also on the horizon. One major shift to note is that from April 2027, most unused pension pots and lump sum death benefits will be treated as part of a person’s estate for IHT purposes. This change could push a greater number of estates over the inheritance tax threshold, potentially resulting in unexpected tax liabilities.
Insights from Industry Experts
Recent research from the Association of Lifetime Lawyers — a respected membership body of expert lawyers from across the UK — has revealed some eye-opening trends:
- Surge in Enquiries: Approximately 80% of lifetime lawyers have reported a noticeable increase in inheritance tax-related enquiries over the last six months, with interest spiking by 68% following the latest budget announcements.
- Rising Trend in Asset Gifting: More than three-quarters (77%) of lawyers have observed clients increasingly exploring the option of gifting assets during their lifetime to reduce the potential inheritance tax burden.
- Awareness Gap: Despite the growing interest, around 66% of lawyers believe that many individuals remain unaware of the available options for effective inheritance tax planning.
The Need for Proactive Estate Planning
These developments underscore an urgent need for families to review their financial and estate planning strategies. The current landscape, characterized by rapid changes and mounting complexity, can leave many uncertain about how best to protect their loved ones. I have seen firsthand how discussions around estate planning—which can often feel daunting—are essential to minimize both financial and emotional stress later, especially with the complexities of inheritance tax.
Proactive steps such as reviewing your will, considering asset gifting, and reassessing your pension arrangements can provide a measure of security against inheritance tax. By acting now, you can ensure that your financial legacy is structured in the most tax-efficient manner possible.
How We Can Help
At Morgan LaRoche Solicitors, we understand that the intricacies of inheritance tax and estate planning are not just about numbers—they’re about safeguarding the future of those you care about. Seeking advice from a specialist solicitor, such as an Accredited Lifetime Lawyer, can offer clarity and a bespoke strategy tailored to your circumstances.
If you’re feeling overwhelmed by these changes or unsure where to start, I encourage you to reach out for professional guidance. A well-considered inheritance tax plan today can make all the difference in protecting your family’s financial future tomorrow.
