Act now and plan ahead for upcoming changes to inheritance tax

With significant updates to inheritance tax (IHT) rules on the horizon, a wealth management expert at Hessle-based legal firm Hamers is calling on families to take decisive action to protect their financial legacy.

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.

Loren McDermott, Wealth Management Solicitor at Hamers, 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%) of experts 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, two-thirds of solicitors believe that many people still do not fully understand their IHT planning options.

Loren, who is a member of The Association of Lifetime Lawyers, stresses the urgency of acting before it is too late: “The IHT landscape is evolving quickly, leaving many uncertain about how to secure their family’s financial future. 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 can be overwhelming for families. By taking proactive steps now, you can minimise the impact of IHT and reduce financial and emotional stress for your loved ones. Frank discussions about finances and estate planning are crucial for ensuring that your family is well-prepared for the future”

Loren adds: “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.”

If you’re finding inheritance tax a challenge, get in touch!