Inheritance Tax for Families: Why More Households Could Be Affected

Many people still think inheritance tax (IHT) is only a problem for wealthy families.

Increasingly, that’s no longer the case.

Property prices have risen. Pension values have grown. However, inheritance tax allowances have remained frozen for years. As a result, more families could find themselves facing an inheritance tax bill.

With further changes proposed from April 2027, now may be a good time to review your estate planning arrangements.

Frozen Thresholds Are Catching More Families

The nil-rate band has remained at £325,000 since 2009.

The residence nil-rate band currently stands at £175,000.

While these allowances have stayed the same, the value of many estates has increased. House prices have risen in many parts of the UK and pension savings have grown over time.

Consequently, estates that once sat below the inheritance tax threshold may now exceed it.

Pensions Could Increase Estate Values

Proposed changes from April 2027 could bring unused pension funds into the inheritance tax calculation.

For many people, their pension is now one of their largest assets. Therefore, including pensions could increase the value of an estate significantly.

The proposals are still subject to legislation and may change before implementation.

What Could This Mean for Your Family?

For some families, the impact could be significant.

You may face:

• A larger inheritance tax bill than expected.
• Less wealth passing to beneficiaries.
• More administration for executors.
• Greater pressure to plan earlier.

This does not mean everyone will face an inheritance tax problem. However, it does mean more families should understand their potential exposure.

Why It May Be Worth Reviewing Your Plans

Inheritance tax planning is not just about reducing tax.

It is also about understanding your position and making informed decisions.

A review can help you understand how your assets fit together, whether your estate could face inheritance tax and what options may be available.

How Fathom Can Help

Many families are surprised when they discover the potential value of their estate.

At Fathom Financial, we help clients understand how inheritance tax rules could affect their family and their long-term plans.

If you are concerned that inheritance tax could affect the wealth you leave behind, we would be happy to help.

Important Information

This article is for information purposes only and does not constitute financial advice. Any decisions should be based on your individual circumstances and objectives.

Inheritance Tax Planning and Trust Advice are not regulated by the Financial Conduct Authority (FCA).

The proposed inheritance tax changes referred to in this article are subject to legislation and may change before implementation.