For years, inheritance tax (IHT) was often viewed as a problem for only the very wealthy.

Today, that's no longer the case.

Rising property values, successful businesses, growing investment portfolios, substantial pension funds and frozen tax thresholds mean many business owners and senior professionals are building estates that could face significant inheritance tax liabilities—often without fully realising it.

The landscape is now changing again.

Recent reforms to Business Property Relief (BPR) and the planned inclusion of unused pension funds within an estate for IHT purposes from April 2027 are causing many families to rethink how they approach wealth preservation and legacy planning.

The reality is that if you haven't reviewed your estate planning recently, now is the time to do so.

What Is Changing?

Two developments are particularly significant.

1. Business Property Relief Is Becoming More Restrictive

Historically, qualifying business assets could often be passed down free from inheritance tax through Business Property Relief.

Recent reforms mean that many business owners can no longer assume that the full value of their business will enjoy unlimited protection.  The first £2.5m per individual generally receives 100% relief, with the remainder receiving a 50% reduction in this relief.

As a result, some family businesses that previously expected little or no inheritance tax exposure may now face substantial liabilities.

2. Pension Wealth Will Become Part of the IHT Conversation

For many years, pensions have been one of the most effective intergenerational planning tools because unused pension funds generally sat outside an individual's estate for inheritance tax purposes.

From 6 April 2027, that position is expected to change.

Many pension funds will effectively become part of the inheritance tax calculation, creating a significant shift in how successful families think about estate planning and wealth transfer.

For some families, pensions represent their largest single asset outside their home or business.

Bringing those assets into scope could materially alter the inheritance tax position of an estate.

Why This Matters More Than Ever

Many individuals have accumulated wealth gradually over decades:

• Growing businesses
• Pension contributions
• ISA portfolios
• Investment accounts
• Buy-to-let properties
• Family homes
• Executive bonuses and share schemes

Individually, each piece may seem manageable.

Collectively, they can create a substantial inheritance tax exposure.

The challenge is that many people look at assets individually rather than viewing their estate as a whole.

Modern inheritance tax planning requires a joined-up view of:

• Businesses
• Pensions
• Property
• Investments
• Family objectives
• Succession plans
• Cashflow requirements

Because ultimately, inheritance tax planning isn't just about reducing tax.

It's about ensuring your wealth passes to the right people, at the right time, in the most effective way possible.

Case Study 1: The Business Owner

James, aged 62, built a specialist manufacturing business over three decades.

Today, the company is worth approximately £7 million and both of his children work within the business.

Alongside the company, he also has:

• A pension worth £1.3 million
• Commercial property
• Investment portfolios
• A valuable family home

Historically, most of the family's planning focused on business succession.

The assumption was that the business and pension arrangements would largely take care of themselves.

However, under the evolving rules:

• Part of the business value may become exposed to inheritance tax.
• His pension may also be brought into the inheritance tax calculation from April 2027.

Suddenly, questions emerge:

• Could the shares be held more tax efficiently now and for IHT purposes?
• How will any tax liability be funded?
• Will the family need to sell assets?
• Can the business remain financially stable?
• Are shareholder agreements aligned with succession intentions?

The most important lesson?

Inheritance tax planning for business owners is no longer simply about passing shares to the next generation. It requires coordinated planning across the entire estate.

Case Study 2: The Senior Professional

Sarah, a consultant surgeon, and her husband David, a law firm partner, earn around £400,000 per year.

Following successful careers, they have built:

• A family home worth £1.1 million
• Pension funds of approximately £2.1 million
• ISAs and investments worth £650,000
• Cash reserves of £180,000

Like many professionals, their focus had always been retirement planning rather than estate planning.

Their pension funds were viewed as both retirement assets and an eventual legacy for their children.

The forthcoming pension changes prompted a wider review.

Instead of focusing purely on products or tax allowances, they began asking deeper questions:

• Do our wills still reflect our wishes?
• Have beneficiary nominations been updated?
• Are we holding more wealth than we actually need?
• Should we start gifting during our lifetime – either directly or into trust?
• How can we help children and grandchildren now rather than later?

What began as an inheritance tax review evolved into a broader family wealth planning exercise.

And that's often where the greatest value lies.

Seven Key Considerations for Effective IHT Planning

There are many areas to consider when it comes to IHT Planning as part of wider Family Financial Planning, but here are 7 key areas I would encourage everyone to consider.

1. Understand the Value of Your Estate and Your Potential IHT Liability

You cannot plan effectively if you don't know your starting position.

Many people know the value of individual assets but have never calculated:

• Their total estate value
• Their current inheritance tax exposure
• Their projected exposure after April 2027

Until you've established those figures, it is difficult to make informed decisions.

2. Be Clear About Your Objectives

Not every client has the same goals.

Some want to minimise inheritance tax as much as possible.

Others want to maximise their enjoyment of wealth during retirement.

Many want a balance of both.

There is no universal solution.

Good planning starts by understanding what success looks like for you and your family.

3. Ensure Your Will and Lasting Powers of Attorney Are Up to Date

Estate planning starts with strong foundations.

A surprising number of successful individuals have:

• Wills that no longer reflect their circumstances
• No Lasting Powers of Attorney
• Outdated beneficiary nominations

Before considering sophisticated planning strategies, ensure the basics are in place.

4. Don't Forget to Spend Your Wealth

This may sound counterintuitive.

Many people spend decades building wealth only to find they are reluctant to enjoy it.

Yet often the original purpose of wealth was to provide:

• Freedom
• Experiences
• Security
• Opportunities

Sometimes the best strategy isn't preserving every pound, it's using wealth intentionally to improve your quality of life.

5. Consider Gifting During Your Lifetime

Gifting remains one of the most effective estate planning tools available.

It can allow family members to benefit when support may be most valuable rather than decades later.

This may include:

• Using available gifting allowances
• Supporting property purchases
• Funding education
• Helping children and grandchildren establish financial security

Of course, gifting requires careful consideration to ensure your own long-term financial security remains intact.

6. Use Trusts Where Appropriate

Trusts can provide flexibility and control in certain circumstances.

They may help families:

• Protect assets
• Structure wealth transfer
• Support future generations
• Manage complex family situations

However, trusts are not a one-size-fits-all solution and should always be considered within the context of a broader estate strategy.

7. Explore IHT-Friendly Investments and Insurance Solutions

Certain investments may qualify for favourable inheritance tax treatment.

In addition, life assurance can often be used to provide liquidity that helps meet an inheritance tax liability when it arises.

Sometimes the objective isn't eliminating the tax bill entirely.

Instead, it's ensuring funds are available to meet it without placing pressure on the family or forcing the sale of important assets.

The Most Important Principle: Have a Joined-Up Plan

The biggest mistake I see is treating estate planning as a collection of separate issues.

A solicitor reviews the will.

An accountant considers the business.

A financial planner reviews investments, pensions and income requirements.

Individually, each conversation has value.

Collectively, they are far more powerful.

The most effective inheritance tax planning happens when your:

• Estate plan
• Retirement strategy
• Business succession arrangements
• Investment portfolio
• Family objectives
• Tax planning

are considered together.

Because inheritance tax planning isn't ultimately about tax.

It's about ensuring the wealth you've spent a lifetime building benefits the people and causes you care about most.

With the changes arriving in April 2027, now is an ideal time to review your position and ensure your plans remain fit for purpose.

If you're a business owner or successful professional and haven't reviewed your estate planning in light of the April 2027 changes, now is an ideal time to start the conversation. Early planning doesn't necessarily mean making immediate decisions, but it does provide greater choice, more flexibility and valuable peace of mind.

Get in touch if some of this resonates and you want to explore further.

‍