March 3, 2026
Private Client
Freya Grant
The 2024 Budget marked one of the most significant shifts in the inheritance tax (“IHT”) landscape in decades.
Much of the immediate commentary focused on the reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR). But these changes are only part of a broader recalibration of how wealth will be taxed on death. Over the coming years, pensions — long regarded as an IHT-efficient wrapper — will also be brought firmly into the inheritance tax net.
Taken together, the message is clear: estate planning can no longer rely on historic assumptions.
From April, the removal of unlimited 100% relief fundamentally alters how business and agricultural assets must be managed.
Where advisers previously worked within a regime of blanket protection, planning must now revolve around allowances and timing. The use of the new capped relief — and the transferable allowance — will become central to individual estate strategies.
For families whose qualifying assets exceed the combined £5 million threshold, lifetime transfers may require renewed consideration. Without full relief, failure to manage exposure between first and second death could generate a substantial liability.
That said, this is not a simple acceleration exercise.
The seven-year survivorship rule remains critical. For farming families and owner-managed businesses, the tension between tax efficiency, control and succession will continue to shape planning conversations.
The reform sharpens the analysis — it does not remove the need for careful balance.
The trust landscape is equally affected.
A key distinction now exists between trusts established before 30 October 2024 and those created (or acquiring qualifying assets) after that date.
Trusts holding qualifying assets before 30 October may qualify as “Qualifying Pre-Commencement Settlements” (QPCS). These benefit from transitional protection and will not fall into the new capped regime until their first ten-year anniversary after 6 April 2026. For many, this provides a valuable planning window to reorganise assets or consider appointments.
By contrast, trusts established or funded on or after 30 October 2024 enter the new regime from April. Critically, multiple trusts created by the same settlor after that date will share a single allowance. Advisers must therefore assess the settlor’s entire trust structure — not each trust in isolation.
Ten-year anniversaries now take on even greater significance. The composition and value of assets at that point will directly determine the periodic charge. The timing of appointments either side of the anniversary may materially affect exposure.
Liquidity planning also becomes central. With relief reduced above the allowance — and certain assets such as AIM holdings only qualifying for 50% relief — charges may arise without a natural source of cash. Trustees must consider whether instalments are viable, or whether asset realisation will be required.
Perhaps the most widely felt change will be the inclusion of pensions within the IHT regime from April 2027.
For many years, pensions have been preserved as the last asset to draw upon — a tax-efficient vehicle outside the estate. That long-standing strategy will require reassessment.
Several areas merit immediate attention:
This is an area where coordinated advice between legal and financial advisers will be essential.
As relief regimes tighten and pensions fall within scope, liquidity risk increases — particularly for asset-rich, cash-poor estates.
Life insurance is therefore likely to play a more prominent role in estate planning. Policies should generally be written in trust; otherwise, proceeds may themselves fall into the taxable estate.
Increasingly, effective planning will require alignment between structural advice, financial modelling and liquidity forecasting.
Across both business relief reform and pension changes, one theme emerges: inheritance tax planning is becoming less about isolated transactions and more about ongoing review.
Allowances must be monitored. Asset values must be tracked. Relief utilisation must be managed proactively rather than assumed.
It is also worth noting that the legislation remains in draft form and may evolve before implementation. Nevertheless, the direction of travel is clear.
The 2024 reforms do not simply adjust inheritance tax — they reshape how advisers and families must approach inter-generational wealth planning. Although aspects of the legislation remain in draft, the direction of travel is clear. Proactive review over the coming years will be key to ensuring estates remain structured efficiently as the new regime takes effect.
