Caroline's article was published in the FT Adviser, 18 August 2025, and can be seen here.
Caroline Foulger, Partner in our Private Client department, highlights that while the introduction of the transferable nil rate band in 2007 and the residence nil rate band in 2017 aimed to ease the burden of Inheritance Tax (IHT), the upcoming changes from April 2027 mark a significant shift.
Unused pension funds will be brought into the scope of IHT, removing a previously tax-efficient shelter for many. This change, combined with frozen IHT thresholds until 2030, is expected to increase the number of estates paying IHT by over 10,000 annually and raise an additional £1.7 billion per year by 2030. With average estates already exceeding the IHT threshold, this shift will impact not just the wealthy but also financially average families, many of whom may not consider themselves affluent.
Caroline stresses the importance of proactive and ongoing IHT planning, especially as traditional pension strategies lose their tax advantages. Families are encouraged to consider a range of planning tools, from annual gifting and surplus income strategies to trusts and life insurance. Wills may also need revisiting to ensure allowances are fully utilised.
However, planning is not just financial, it requires open family discussions, as differing views on inheritance and tax can shape the best course of action. The inclusion of pensions in IHT has sparked vital conversations, and starting these early is key to managing future liabilities effectively and compassionately.
Read the full article on the FT Adviser website [external link].
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