Private client solicitors will be advising many affected clients on restructuring their wealth and reviewing their wills and succession planning ahead of the changes.

Professional advisers are reportedly already seeing a significant increase in people seeking advice following the changes announced almost a year ago. By way of reminder:

From April 2026 relief at 100% will be limited to the first £1m of combined business and agricultural property. This means that effectively farmers and business owners will pay tax at 20% on everything in excess of £1m.
From April 2027 the deceased’s unused pension and death benefits will be included within the value of the estate for IHT purposes. Dependants’ scheme pensions will continue to be exempt.

The imposition of limits on BPR and APR is a blow to many business owners and investors where the total value of their estates exceed all available exemptions and reliefs.

Planning ahead

Many more farming estates and agricultural businesses and investors could face an unexpected IHT bill at a time when they may lack the ready cash available to pay the bill when due. The majority of assets are likely to be illiquid.

Robust estate planning in light of the changes is increasingly important. Creative ways to protect clients’ business assets – particularly farming estates and small family enterprises – will be needed; for example, leaving a legacy of agricultural property on trust.

Charitable giving

Many clients impacted by the cap on BPR/APR may, understandably, have little appetite to leave assets to charity as the majority will be seeking to keep their assets within the family. Even so, the option of leaving a legacy to a charitable organisation will become more important as clients will be looking at how they can minimise their potential IHT liability.

Though there are still several months before the new rules come into effect, they are already driving a noticeable increase in charitable legacies in wills. A tracking study was recently carried out by Savanta for Remember A Charity with a sample of 237 professional advisers (including 150 solicitors and 47 will-writers).

Tax incentives was the most common reason given by survey respondents for raising the charitable option with clients. Almost 9 in 10 expect to see increased demand for professional advice on estate and IHT planning.

The April 2027changes to unused pensions is, it appears, already causing concern for individuals whose estates could be affected. The majority (92%) of advisers surveyed believe that estate and tax planning will become even more important after, and more than half are already being asked for advice.

Leaving a charitable legacy because of the tax incentives could become more important for clients. It ought to remain a consideration for practitioners advising on IHT mitigation.

Lifetime transfers

While a lifetime gift or transfer could be a tax efficient option, bear in mind that there are reports the related tax reliefs may be targeted in the November 2025 Budget. The Chancellor may be considering capping the amount a person can gift during their lifetime – or scrap the relief altogether.

The sector will be watching closely to see what further changes may be proposed.

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