Families are being urged to take action to safeguard their financial future ahead of upcoming changes to inheritance tax (IHT) rules.
The latest budget announced a freeze on the IHT nil rate band and residence nil rate band thresholds until 2030, meaning more families are likely to be impacted as property values continue to rise. Changes to tax relief on certain assets and adjustments to pension rules will see more estates facing unexpected tax liabilities.
Emma Houghton, Partner at Berry & Lamberts Solicitors, warns that failing to plan ahead could result in significant financial losses for loved ones, with many unaware of the options available when it comes to planning to mitigate IHT.
New research from The Association of Lifetime Lawyers, a membership body of expert lawyers from across the UK, reveals a sharp increase in concerns around IHT. A staggering 80% of their lawyers have reported a surge in IHT-related enquiries over the last six months alone, with interest spiking further (68%) following the latest budget.
More than three-quarters (77%) have observed a growing trend of clients exploring the option of gifting assets during their lifetime to reduce the IHT bill their loved ones might have to pay. Despite this rising demand, 66% of lawyers believe many people remain unaware of their options for IHT planning.
Emma stresses the urgency of acting before it is too late: “The landscape of IHT is shifting rapidly, and we're seeing many people left uncertain about how to protect their loved ones. We've seen an increase in interest in property gifting, as well as growing concerns about access to pensions funds that could jeopardise long-term financial security.”
“The complexity of these changes has caused confusion among families. Taking proactive steps now can help minimise the impact of IHT and ease financial and emotional stress for your family. Discussing finances and estate planning may feel challenging, but being open about it is key to ensuring loved ones are well cared for in the future.”
“One big change is that from April 2027 most unused pension pots and lump sum death benefits will become part of a person’s estate for IHT purposes, potentially pushing many more people over the IHT threshold. Given the potential impact of this change, it’s a good time to review your will as part of your overall investment and gifting strategy to ensure your legal and financial arrangements are as tax-efficient as possible.”
Seeking professional advice from a specialist solicitor, such as Emma Houghton, who is an Accredited Lifetime Lawyer, can provide peace of mind and a clear strategy to navigate these complex changes with confidence.
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The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
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