Among the changes announced in the UK Autumn Budget in October 2024, significant reforms to inheritance tax (IHT) are set to reshape how wealth is passed on — particularly for those with business, agricultural, or pension assets. But recent YouGov polling commissioned by us reveals that most people over 50 remain unaware of how these changes will affect them. Only 26% of respondents aged 50+ said they understood the new rules and their impact on their family.
Below, Hayley Robertson, partner in our private client team, explains why this matters - and why now is the time for individuals, trustees, and business owners to revisit their succession plans.
Awareness of change remains low
Among the changes announced in the Autumn UK Budget in October 2024, there are some very considerable revisions to Inheritance Tax ("IHT"). The fundamentals are staying the same but there are very significant changes to the IHT payable on businesses, business assets, agricultural property and pensions.
The recent YouGov survey makes it clear that the majority of people lack awareness of the upcoming changes to IHT with 20% of UK adults aged 50+ being completely unaware of the new rules and 54% of UK adults aged 50+ being aware of the changes to the rules but remaining unsure as to how they would apply to their own personal and family circumstances. Starkly, only 26% of UK adults aged 50+ said that they were aware of the new rules and felt that they understood how the changes would impact on them and their families.
Why early professional advice is key
These statistics are perhaps not surprising but for a private client lawyer specialising in IHT and succession planning I see it as crucial that appropriate professional advice is sought at an early stage regardless of the level of wealth to gain a full understanding of the changes and to allow sufficient time to formulate a succession plan that works for them and their families. Critically, this includes reviewing the terms of any existing wills (if they have them in place) or putting new wills in place that are as IHT efficient as possible whilst taking into account the new rules.
Three key changes – and three timelines
Perhaps rather unhelpfully, the IHT changes come into force at different times.
1. Domicile rule change – 6 April 2025
The changes to the domicile rules are already in force (as of 6 April 2025) meaning that 'domicile' is no longer a concept relevant to the question of whether non-UK assets will be subject to UK IHT – the answer is now broadly dependent on whether the taxpayer was UK resident at the time of death.
2. Business and agricultural reliefs – 6 April 2026
The changes to agricultural property ("APR") and business property relief ("BPR") come into force on 6 April 2026. If assets currently qualify for APR or BPR at 100%, under the new rules the first £1m will still be IHT free however the balance of assets will only benefit from 50% of the relief – resulting in an effective IHT death rate of 20% on the value of qualifying APR / BPR assets that exceed the £1m threshold.
3. Pensions – 6 April 2027
Finally, the changes to pensions come into force on 6 April 2027. From this date, most unused pension funds and death benefits will be included within the value of a person's estate for IHT purposes – currently (with some limited exceptions) unused pensions are free from IHT following the death of the pension scheme member. As well as ensuring any nomination / expression of wishes are up to date I'd also strongly recommend taking independent financial advice.
The time to act is now
In summary, these changes will have a huge impact not just on individuals but also on partnerships and trusts that own trading businesses, farms and landed estates. Plans will require to be made to cover significant IHT which will now be due on death, in relation to certain asset transfers and during the lifetime of existing trusts where previously no IHT would have been due. Existing succession and estate plans will need to be revisited and adjusted in light of the new rules. In short, the time to act is now!
Explore the full findings
Our Future of wealth transfer survey offers a unique insight into the hopes, hesitations and expectations of people across the UK when it comes to passing on wealth. To see more data and expert commentary, view the full survey here.
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