Overview
- From April 2026, 100% business and agricultural property relief will be capped at a combined £1 million, and from April 2027 defined-contribution pensions will be included in estates for inheritance tax.
- Advisers are urging households to use established gifting routes such as the seven‑year rule, the £3,000 annual exemption and £250 small gifts, and the strict ‘normal expenditure out of income’ exemption that HMRC tests for regularity.
- Lawyers report rising interest in trusts to move assets outside estates, though discretionary trusts can trigger upfront and periodic charges and carry setup and ongoing costs.
- Analyses warn inherited pensions could face very high effective tax burdens when inheritance tax combines with income tax, especially for estates over £2 million or for unmarried beneficiaries.
- Local and national guidance highlights reviewing wills, considering life insurance in trust to cover expected IHT, and acting early, while separate reports suggest ministers may be reviewing gifting rules ahead of the Budget.