The Big Inheritance Tax Change Coming in 2027 That Families Should Start Planning for Now

Proposed changes to pensions and inheritance tax are attracting growing attention

Inheritance tax planning has become an increasingly important topic for many families in recent years, particularly as rising property values and long-term asset growth bring more estates within scope of inheritance tax. One area now attracting significant attention is the proposed change to how pensions will be treated for inheritance tax purposes from April 2027. Whilst pensions have traditionally been a great vehicle to mitigate Inheritance Tax, proposed reforms will bring pension wealth into the Inheritance Tax calculation.

As a result, it is now essential to review your estate planning arrangements where you have been relying on leaving your pension tax free. For some families, this may simply involve reviewing existing wills or pension beneficiary nominations. For others, it may prompt wider discussions around succession planning, family wealth and how to pass assets between generations.

More families may be affected than expected

Many people still associate inheritance tax with extremely wealthy estates. In practice, however, rising property prices and accumulated pension wealth mean that more middle-income families are now considering whether inheritance tax could affect them in the future. A family home, savings, investments and pension assets can collectively create a far larger estate than many individuals initially realise. This is particularly an issue for families in the South East where property prices are high and the Inheritance Tax nil rate band allowances have not kept pace.

Families who may never previously have considered inheritance tax planning are increasingly recognising the importance of understanding their financial position and reviewing whether their existing arrangements remain appropriate.

Estate planning is about more than tax efficiency

Importantly, estate planning should not be viewed purely as a tax exercise. Whilst inheritance tax is understandably an important consideration for many families, good estate planning also considers wider personal and practical objectives. This may include protecting vulnerable beneficiaries, planning for future care needs, supporting younger generations responsibly or ensuring business interests are dealt with appropriately in the future.

In many situations, clients are primarily seeking reassurance that their affairs are organised clearly and that their loved ones will be supported appropriately if something happens unexpectedly. Careful planning can help reduce uncertainty and ensure important decisions are made thoughtfully rather than reactively.

Wills and beneficiary nominations should be reviewed regularly

One issue frequently encountered is that wills or pension beneficiary nominations have not been updated for many years despite significant changes in personal circumstances. Marriage, divorce, children, retirement, property purchases and changing financial positions can all have a substantial impact on whether existing arrangements remain suitable.

Regular reviews can therefore be extremely important. A will or nomination that reflected someone’s wishes ten or fifteen years ago may no longer align with their current intentions or family circumstances. Reviewing arrangements periodically can help ensure that plans continue to reflect both personal objectives and current legal considerations.

Avoid reacting emotionally to headlines or online commentary

Whenever inheritance tax changes are discussed publicly, there is often an increase in online commentary and informal advice. However, estate planning decisions should always be approached carefully and based on individual circumstances rather than fear or speculation. What may be appropriate for one family may not necessarily be appropriate for another.

Professional advice can help individuals understand potential inheritance tax exposure, available allowances and wider planning considerations in a measured and structured way. Taking advice early often provides greater flexibility and allows decisions to be considered carefully over time rather than being made under pressure.

If you would like advice from a qualified professional regarding wills, inheritance tax planning or estate administration, please contact Marsons Solicitors.