Significant changes are coming to the UK's Inheritance Tax (IHT) system in April 2026. The reforms aim to boost tax revenues and tackle perceived inequalities, but they’ve already sparked concern among farmers, business owners, and for individuals with significant pension pots, investments and assets.
Our report analyses seven years of data across 121 UK postcode areas, identifying key trends, future landscapes and expert opinion from our Private Client Advisory team.
Key changes to be aware of:
Shift from Domicile to Residence-Based IHT
- From 6 April 2025, the UK will shift to a residence-based IHT system, taxing long-term residents (10+ years in the UK) on their worldwide estate, with a "tail" provision keeping former residents within IHT scope for 3 to 10 years after leaving.
Agricultural and Business Property Reliefs (APR & BPR)
- Currently there is a 100% relief from IHT on qualifying assets, however the reliefs will be capped and reduced from 6 April 2026, this will affect qualifying assets, AIM shares and Trusts.
Inclusion of Unused Pensions in IHT.
- From 6 April 2027, unused pension pots and death benefits will be included in the deceased's estate for IHT purposes.
Freezing of IHT Thresholds
- The IHT thresholds will remain frozen until 5 April 2030, despite rising asset values, which is expected to increase the number of estate liable for IHT.
Why act now?
These IHT reforms will significantly increase tax burdens, particularly for family businesses, farms, and pension assets. Proactive estate planning is essential to mitigate potential liabilities, and early discussions and strategic planning will be crucial for protecting your estate, securing your beneficiaries' future, and preserving your legacy.
Key contacts:
Helen Clarke - Partner, High Net Worth & International Private Client Services.
Andrea Jones - Partner & National Head of Private Client Advisory
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