Sweeping change to the treatment of pensions for inheritance tax (IHT) comes into force from April 2027 raising the spectre of a 40% tax bill and prompting more people to consider making gifts during their lifetime.

As IHT changes loom large, more people will be considering giving gifts during their lifetime to cut their tax bill. However, different gifting methods offer varying degrees of flexibility.

HMRC figures estimate that IHT will be payable on an extra 10,500 estates in the same tax year, hiking the amount of tax paid by 38,500 estates and increasing the tax due by £34,000 each on average.

One of the most effective ways to manage an IHT bill is by making gifts during your lifetime.