Budget Watch: IHT Reform Sparks Planning Alert

We track the political commentary leading up to the Budget closely because small policy shifts can have a big impact on our clients. With pensions already set to fall under Inheritance Tax (IHT) from 2027, there are growing signs that wider reforms could be on the way.

What’s on the Table?

• Lifetime gifting rules: currently, many gifts fall outside IHT if the donor survives seven years. There are calls to extend this period (possibly to 10 years), abolish taper relief entirely or cap lifetime tax free gifts.
• Wealth taxes by stealth: proposals suggest freezing more thresholds or aligning capital gains tax and IHT to raise revenue.
• Estate planning under scrutiny: trusts and exemptions may face tighter restrictions.

Why This Matters

For families already worried about frozen IHT thresholds and pensions being included, any further changes could significantly increase liabilities.

Uncertainty Ahead

With the Autumn Budget approaching, speculation is growing. While nothing is confirmed, the message is clear: don’t delay planning in the hope that the rules stay the same.

IHT reform may be politically controversial, but governments of all stripes see it as a potential revenue source.

At Fathom Financial, we help clients stay ahead of policy changes with flexible, tax-efficient planning. If you’d like to make your estate strategy “Budget-proof”, get in touch today.

• This guide is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.

• The Financial Conduct Authority does not regulate some aspects of Trust, Tax and Estate Planning