Death, Taxes… and Whatever the Chancellor Thinks of Next

If there is one certainty in the world of estate planning, it is that whenever clients and advisers have finally adjusted to a new set of inheritance tax rules, the Treasury starts eyeing up another part of the tax code to tinker with.

The next Budget may not contain the dramatic headlines of recent years, but it would be unwise to assume that inheritance tax planning can be left on autopilot. Successive governments have recognised a simple truth: inheritance tax raises significant revenue, affects a relatively small number of voters directly, and can often be increased without actually increasing the rate.

In other words, it is a politician’s dream.

The Great Inheritance Tax “Stealth Tax”

Let’s start with what probably won’t change. The inheritance tax nil-rate band remains stuck at £325,000, a figure that has not moved since 2009, while the residence nil-rate band remains at £175,000. Both are frozen until 2031.

The effect is rather like leaving the speed limit unchanged while making all the cars faster. More and more estates are exceeding the thresholds without any change to the tax rate itself.

For years, inheritance tax was portrayed as a tax on the very wealthy. Tell that to the family business owner in Altrincham, the farmer in Cheshire, or the retired couple in Knutsford whose property and investments have increased in value over several decades. Across the North West, more families are finding themselves caught by inheritance tax not because they consider themselves wealthy, but because the tax thresholds have stood still while asset values have not.

Expect no sympathy from the Treasury. Fiscal drag is doing exactly what it was designed to do.

Business Owners and Farmers: The Honeymoon Is Over

Recent reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR) have already changed the landscape significantly.

From April 2026, full relief is effectively capped by a new £2.5 million allowance, with only 50% relief generally available above that level.

For years, families could reasonably expect substantial business and agricultural assets to pass down the generations with little or no inheritance tax exposure. That assumption is now considerably less secure.

The question for the next Budget is whether the Government considers the job finished.

Personally, I would not be placing large bets on that.

Whenever reliefs are perceived to benefit wealthier individuals, they tend to attract further scrutiny. Business owners should therefore be reviewing succession plans now, rather than waiting to see whether the Chancellor decides that today’s relief is tomorrow’s loophole.

Pensions: From Sacred Cow to Revenue Opportunity?

For years, pensions enjoyed almost mythical status in estate planning circles.

“Leave the pension untouched and spend everything else first” became standard advice in many circumstances.

However, planned reforms are set to bring many pension funds within the inheritance tax regime from April 2027. That change alone is enough to require a rethink for many affluent families.

If there is one lesson from recent years, it is that no tax advantage should be regarded as permanent. Once the Treasury notices a perfectly legal planning opportunity being used successfully, it develops an almost irresistible urge to investigate it.

The Seven-Year Rule: Safe for Now… But For How Long?

Lifetime gifting remains one of the most effective inheritance tax planning tools available.

Make a gift, survive seven years, and that gift generally falls outside your estate.

Simple.

Almost suspiciously simple.

Every few years rumours emerge that the seven-year rule may be reviewed, shortened, extended or replaced entirely. None of those changes are currently on the table, but if the Government wishes to increase IHT receipts in future years, gifting rules represent an obvious area for consideration.

That does not mean clients should panic.

It does mean clients who are already contemplating gifts should avoid unnecessary delay. Tax planning generally works best when undertaken deliberately rather than frantically.

Trusts: Still Useful, Still Misunderstood, Still in the Treasury’s Sights

No discussion of estate planning would be complete without mentioning trusts.

Trusts remain one of the most flexible and valuable planning tools available. They can provide protection for vulnerable beneficiaries, preserve assets following remarriage, safeguard family wealth and assist with succession planning.

Whilst there is no indication of imminent trust reform or changes to trust taxation and restrictions on reliefs are all possibilities that regularly feature in policy discussions.

The message is simple: trusts remain extremely useful, but they are no longer something to establish and forget about for twenty years.

What Should Clients Be Doing?

Whenever Budget speculation starts, there is a temptation to do absolutely nothing until the Chancellor has finished speaking.

That is not our advice, as good estate planning is not about predicting the Budget. It is about building a plan that can survive several Budgets.

The clients best placed for whatever comes next are those who:

• Have a professionally drafted and up-to-date Will
• Understand the value and composition of their estate
• Review their inheritance tax exposure regularly
• Consider lifetime gifting strategies
• Review business succession arrangements
• Reassess pension nominations and estate planning structures
• Keep trusts and family arrangements under regular review

Final Thoughts

Every Budget generates winners, losers and a fresh wave of newspaper headlines predicting the end of inheritance tax planning as we know it.

The Chancellor may or may not come for pensions. They may or may not revisit gifting rules. They may or may not decide that another inheritance tax relief has become too generous.

What is almost certain, however, is that HM Treasury’s interest in your estate will continue to grow.

The question is whether your planning grows with it.

For business owners, farming families and high-net-worth individuals across Cheshire, Greater Manchester and the wider North West, the message remains the same: don’t wait for the Budget. The best estate planning opportunities are usually available before the Chancellor starts looking for them.