Initially established to create a more economically even society, Inheritance Tax (IHT) laws were introduced to stop the accumulation of wealth over generations and redistribute it on behalf of the general public and the state.
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Inheritance tax planning is becoming increasingly important for individuals, families, business owners and farmers who want to protect their wealth and pass assets on tax efficiently. With major inheritance tax changes taking effect from April 2026 and April 2027, it is essential to review your estate planning arrangements, business reliefs, agricultural assets and pension strategy as early as possible.
From 6 April 2026, the 100% inheritance tax relief available through Agricultural Property Relief (APR) and Business Property Relief (BPR) is subject to a new £2.5 million allowance per individual. Qualifying agricultural and business assets above that threshold may still receive relief, but only at 50%, creating an effective inheritance tax rate of 20% on the excess.
Any unused allowance can be transferred between spouses and civil partners, meaning couples may be able to pass on up to £5 million of qualifying assets at the full rate of relief. These inheritance tax changes may have a significant impact on larger estates, family businesses and farming estates, making an early review of succession planning more important than ever.
From 6 April 2027, most unused pension funds and pension death benefits will be brought into the value of an estate for inheritance tax purposes. Under the current rules, pension savings often sit outside the inheritance tax calculation, but this change means pensions may become a much more important part of estate planning. In many cases, inheritance tax could apply at up to 40% where pension funds are left to beneficiaries other than a surviving spouse, civil partner or registered charity. For individuals with substantial pension wealth, these new inheritance tax rules could materially increase the tax payable by an estate, so pension nominations, retirement planning and wider succession arrangements should be reviewed well in advance.
If you are concerned about how these inheritance tax changes could affect your family, business, farm or pension wealth, now is the time to seek professional advice. Reviewing your inheritance tax position early can help you identify planning opportunities, reduce potential liabilities and ensure your estate plans remain aligned with your long-term goals.
(IHT) Inheritance Tax affects many people and can be a complex area of taxation requiring constant review. Planning for the future as early as possible is essential to minimise any potential IHT liability.
Effective IHT planning can help protect you and your family from this unwanted tax burden but with expert advice it may be possible to mitigate its impact. At WR Partners we have the knowledge and experience to deliver tax efficient solutions as part of an overall planning strategy including:
The standard Inheritance Tax rate is charged at 40% on the part of your estate above your nil rate band, currently £325,000, although gifts between spouses or civil partners will be exempt. Where an individual is a homeowner there is an additional Residence Nil Rate Band available up to a maximum of £175,000. This can be restricted depending upon personal circumstances.
There are additional IHT exemptions and reliefs available, most notably Agricultural Relief and Business Relief which can be available at 100% or 50% on agricultural or business assets. This is a particularly complex area of legislation, and it is important to review the nature of these assets and the structure of your business to ensure they are maintained.
A Family Investment Company (FIC) is simply a company that has been established with the purpose of holding investments – whether that is stocks and shares, rental property, or another form of investment.
The rights and interests of the different shareholdings will be determined upon setting up the company so that they meet the founder’s specific needs. The structuring of a FIC can be done in different ways and creates a bespoke vehicle which can be used in a similar way to a family trust and usually allows the founders to retain control and involvement of the company whilst passing on wealth to future generations.
If you and your family need support with inheritance tax planning, Get in touch with our expert tax team to see how we can help.
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