Ian Dyall, head of estate planning at Evelyn Partners, looks at ways to deal with sweeping changes to IHT from business property relief to tax on pension pots
The new year is often a time to take stock financially, and for many families this one will be particularly important with major changes to inheritance tax (IHT) which mean they must think carefully about how they plan to pass on wealth to the next generation.
In the October Budget, Chancellor Rachel Reeves announced that defined contribution pension pots will be included in estates’ IHT liabilities from April 2027, while nil rate bands were frozen for an extra two years, until April 2030.
Worse still changes for business owners and farmers saw a massive overhaul of business and agricultural property relief from April 2026. Under the new regime, the first £1m of combined business and agricultural assets can still be passed on tax-free, but IHT will be levied at 20% on the rest. A 20% rate will also apply to AIM shares.
