Inheritance Tax – Is Your Estate Liable?

Inheritance tax receipts have been breaking records in recent years, with HMRC collecting record amounts as property values continue to rise. With significant rule changes coming in April 2026 and April 2027, it's more important than ever to understand whether your estate might be affected.

What Exactly Is Inheritance Tax?

Put simply, IHT is a tax on the estate of a person who has died, and includes any property, money, investments and personal possessions that they own.

For the majority of people, IHT is not an issue and is unlikely to become one in the foreseeable future. However, the number of people being affected by this tax is forecast to increase sharply in the coming years due to recent announcements made in recent budgets and changes now coming into effect.

Is Your Estate Liable?

Current Thresholds (2026/27):

Every individual has a basic Nil Rate Band of £325,000 worth of assessable assets that can be passed on to beneficiaries free of IHT. This allowance was set way back in April 2009.

Additionally, if you own a house that is or has been your primary residence, and you are leaving it to direct descendants (children or grandchildren), then an additional (up to) £175,000 may also apply in the form of a Residential Nil Rate Band.

This gives a potential allowance of £500,000 per person (exact allowances can vary based on personal circumstances).

For most people this allowance is more than enough to cover the full value of their estate. But for a growing number, the massive increases seen in house prices over the years, combined with the fact that the allowances have been frozen, means that they are unwittingly finding themselves liable for this tax where they previously were not.

Changes Coming April 2026 & April 2027

Two significant changes are coming:

April 2026 – Business & Agricultural Reliefs:

The combined relief cap for business and agricultural property increases to £2.5 million per individual (with spouse transfer available), with the change potentially affecting many family businesses and farms.

April 2027 – Pensions Now Taxable:

From 6 April 2027, unused pension funds will be included within your taxable estate for inheritance tax purposes. This is a major change that will affect many families.

Should You Be Worried and What Can You Do?

Whilst IHT should be considered by everyone in their financial planning, it is those that are either above or close to their personal IHT allowance that should be most concerned.

For those with such concerns, it is firstly very important for you to begin having conversations with your loved ones about the value of your estate and any potential liability. This is vital, as ultimately the ones that are going to suffer the loss will be the beneficiaries of your estate upon your death.

The Good News

Inheritance tax is sometimes described as a voluntary tax, in the sense that the amount eventually payable can often be influenced by planning carried out during your lifetime. There are a wide range of options available when it comes to IHT planning and, depending on your circumstances and the route chosen, it may be possible to reduce a liability — although outcomes vary from family to family and nothing can be guaranteed.

This is where seeking appropriate advice from a suitably qualified financial adviser comes into its own — not only in helping you to understand if you have a liability, but also in providing you with a tailored solution to meet your needs.

Getting Started

With significant changes coming in April 2026 and April 2027, now is an ideal time to review your position if you haven't done so recently.

If you feel that having a discussion would be beneficial to you, please don't hesitate to contact us for an initial consultation. We'll be happy to discuss your personal situation in further detail.

Figures quoted are correct as at September 2026. Tax rules, allowances and thresholds can change.

Important: This article is for information only and does not constitute financial or tax advice. Inheritance tax rules are complex, vary significantly by individual circumstances, and are subject to change. Major changes come into effect in April 2026 (business and agricultural reliefs) and April 2027 (pensions). We strongly recommend working with a qualified financial adviser and tax professional to develop an inheritance tax strategy suited to your specific situation.

For a confidential discussion about inheritance tax planning, please get in touch.