Inheritance Taxโ Changes Prompt Wealthyโ Families toโฃ Revise Estateโ Plans
LONDON – High net worthโข individuals and families are accelerating estate and gifting plans amid growing โexpectations of significant changes to UK inheritanceโ tax โข(IHT) in the upcoming โAutumn Budget, expectedโ in late November. The potential overhaul โฃincludes extending the levy toโค encompass pension potsโ and revisiting existing gifting rules, sparking a flurry of activity amongst financialโข advisors and their clients.
Currently, gifts โmade seven orโ more years before a person’s death are โexempt from the 40% IHT rate. Gifts made between three andโข seven years prior are subject to tax on a sliding scale,โ known as ‘taper relief’,โ ranging from 8%โค to 32%. though, ministers are anticipated to bring pensions into the scope of IHT starting in April 2027, taxing unused pension pots โand death benefits atโ the standard โIHT rate.
“Clients are understandably keen to get ahead of any potential changes, particularly around inheritance โคtax, gifting, and retirement planning,” said Simon Bashorun, head โof โคadviceโ at Rathbones Private Office. He notedโข the speculation is creating “a prolonged โperiodโฆa bane to financial planning” forโฃ his clients.
The โขanticipated changes followโข a previous attempt by the Treasury to reform the wealth levy – dubbed the ‘family farm tax’ – which aimed to remove exemptions โฃenjoyed by owners of farmland and โfamily businesses through Agriculturalโค Property Relief and Business Asset Disposal Relief.โ This earlier proposal triggered widespread โคprotests.
Bashorun โadded that clients with โคsubstantial pension pots – specifically those exceeding sevenโฃ figures – โคare “reassessing their long-term plans โคand โคasking whether they should act before the Autumn Budget.”