By James Grey | Financial Planning Insights | 23 October 2025
The Government’s decision to include pensions within the scope of inheritance tax (IHT) from April 2027 marks one of the biggest shifts in estate planning in recent years. For many families, this change could mean that wealth built up for retirement now risks being taxed on death — pushing more estates above the IHT threshold.
Recent research shows that nearly three-fifths (59%) of financial advisers expect these reforms to increase demand for financial advice as clients seek tailored strategies to protect their wealth. The number of UK households potentially liable for IHT could triple from 1.6 million to over 5 million after 2027.
What’s Changing and Why It Matters
Traditionally, pension funds have been one of the most tax-efficient ways to pass wealth on to future generations. However, from 2027, these funds will be included within the IHT net.
This means families who once fell comfortably below the threshold could now face significant tax liabilities. The shift has prompted a growing focus on trust-based planning, gifting out of surplus income, and investment bonds — three strategies that financial planners expect to play a central role in managing IHT exposure.
Rising IHT Receipts Show a Growing Trend
Government data shows that IHT receipts reached £4.4 billion between April and September 2025, an increase of £100 million compared to the same period last year.
Frozen thresholds, rising asset prices, and tightening exemptions are all contributing to record tax revenues. With more reforms expected in the coming years, it’s likely this upward trend will continue.
Planning Early Can Make a Big Difference
With these upcoming changes, many people are now looking to gift money earlier to reduce the eventual tax burden. However, gifting too much too soon can leave you short later in life — which is why balanced, personalised financial planning is essential.
Every family’s situation is unique, and the right approach depends on your goals, assets, and time horizons. Early preparation gives you more flexibility and control over how your wealth is passed on.
How I Can Help
As an independent financial adviser, I help clients navigate exactly these kinds of challenges. Through careful, forward-thinking planning, we can:
- Assess how the 2027 inheritance tax changes affect your current position
- Identify tax-efficient strategies such as trusts, gifting, or investment restructuring
- Build an estate plan that protects both your retirement security and your family’s legacy
Book Your Free Discovery Call
If you’re unsure how the upcoming inheritance tax reforms could impact your wealth — or you simply want to make sure your plans are as efficient as possible — now is the ideal time to take action.
We’ll have a friendly, no-obligation conversation about your goals, explore your options, and help you take the next step towards confident, secure financial planning