‘I’m an inheritance tax expert – 3 things you can do now to protect more of your wealth’

Britons are being urged to take action now to protect their finances from stricter rules following the Autumn Budget.

Will Stevens, head of planning at said: “The changes to inheritance tax (IHT) announced by in the Autumn Budget have put this often-dreaded levy back in the spotlight. These changes encompass the inclusion of pensions in the death estate, and reforms to agricultural and business property relief.”

Under current inheritance tax rules, estates valued above £325,000 are typically taxed at 40%. This is referred to as the “nil-rate” threshold, and it has been frozen since 2009, despite soaring and .

During the Budget, the Chancellor announced an extension to the freeze on IHT thresholds for a further two years until 2030.

Agricultural Relief and Business Property Relief have also been reformed, effective from April 2026. The first £1million of qualifying combined assets will be exempt from inheritance tax. For assets exceeding £1million, a 50% relief will apply, resulting in an effective tax rate of 20%.

Previously, assets that qualified for this relief were fully exempt from inheritance tax.

Thirdly, qualifying AIM shares will no longer be fully exempt from inheritance tax. Starting in 2026, they will be subject to a 20% inheritance tax rate if held for at least two years.

Finally, from April 6, 2027, inherited pensions may become subject to both inheritance tax and income tax for the recipient. This could result in an effective tax rate of up to 67%, pending consultation.

While rising living costs and increasing property values mean the tax burden on estates continues to grow, Mr Stevens noted: “Families wanting to preserve their wealth across generations can take several proactive steps to mitigate the impact of IHT.”

Embrace gifting – start earlier and give more

Mr Stevens said: “One of the most effective ways to reduce the size of your taxable estate is through gifting. Regular and early gifting allows you to pass on wealth while taking advantage of the current inheritance tax rules.”

He explained that each individual has an annual gifting allowance of £3,000, which can be doubled if unused from the previous tax year.

Additionally, small gifts of up to £250 per person are exempt, as are wedding gifts (within specified limits).

Beyond these allowances, Mr Stevens said: “The ‘seven-year rule’ can help families make larger gifts. If a gift is made more than seven years before the donor’s death, it is generally exempt from IHT.

“However, gifts made within this period may be subject to taper relief, which reduces the tax owed over time. Starting this process earlier not only maximises the chance of surviving the seven-year window but also allows wealth to grow in the hands of younger generations.”

Utilise family-wide tax allowances

Mr Stevens pointed out that many families often miss out on the full spectrum of tax allowances available to them.

By working together, he said: “They can pool resources and strategically utilise options like ISAs, Junior ISAs, and Stocks and Shares ISAs. Each adult in the UK has an annual ISA allowance of £20,000, while Junior ISAs allow parents or grandparents to contribute up to £9,000 per child annually, growing investments tax-free.

“Strategic use of these allowances can help spread family wealth while ensuring it grows tax-efficiently. Coordination among family members is key. Combining allowances and tailoring contributions to meet both immediate needs and long-term goals can significantly reduce the estate’s taxable value.”

Write a will and consider specialist advice

Failing to write a will could mean that the law – not a person’s intentions – determines how assets are divided, potentially leaving more for the taxman than necessary.

Mr Stevens said: “A well-drafted will ensures that your wealth is distributed according to your wishes while also considering tax efficiency. This may involve appointing a lawyer to structure your estate in a way that minimises IHT.”

The tax expert noted that speaking to a financial adviser who specialises in estate planning “is critical”.

He explained: “These professionals can provide tailored strategies for your unique circumstances, ensuring that you and your family make the most of available allowances, exemptions, and planning opportunities. This might include advice on setting up trusts, restructuring assets, or reviewing investments to optimise tax efficiency.”

Mr Stevens added: “The changes announced in the Autumn Budget only underscore the importance of acting now. Start planning today to protect your family’s financial future.”