Your guide to estate planning & tax relief changes in 2026

If you’re considering how to protect your family and wealth for the future, estate planning has become more important than ever, as significant tax relief changes are on the way following the Autumn Budget 2024.

While many are bracing for the government’s upcoming 2025 Autumn Budget, the changes announced in 2024 have yet to make their full impact. The 2024 budget introduced a number of reforms that will affect inheritance tax (IHT), pension death benefits, business and agricultural reliefs, as well as the way assets are passed on to the next generation:

Freeze on nil-rate bands extended to 2030

The budget confirmed that the Nil Rate Band (currently £325,000) and the Residential Nil Rate Band (RNRB, up to £175,000) for passing a home to children or grandchildren will remain frozen until April 2030. With property values and general inflation rising, more estates will breach these thresholds, increasing exposure to IHT.

Pensions no longer exempt from inheritance tax (from April 2027)

One of the biggest changes afoot relates to inheritance tax.

Generally, funds that are passed on from a pension fund would be free from IHT, however the budget confirmed that these funds will be included in the value of an individual’s estate for IHT purposes.

Including pensions for IHT could create substantial costs; in some cases, the added value may push estates over the £2 million threshold, triggering the tapering of the RNRB and increasing overall liability to inheritance tax.

Changes to business & agricultural property relief (from 6 April 2026)

Until now, business property relief (BPR) and agricultural property relief (APR) have often enabled farms, family businesses or trading assets to pass largely free of IHT, provided certain conditions are met.

From April next year, there will be a £1 million cap on the combined value of qualifying business or agricultural property that can benefit from 100% relief. Above that cap, the excess will only receive 50% relief, effectively attracting IHT at about 20%.

Similarly, AIM-listed shares will no longer enjoy full relief or the £1 million threshold and instead attract a 50% relief.

What does this mean for estate planning?

• The combination of threshold freezes and the inclusion of pensions in IHT means many people may end up with larger IHT bills than they had planned for.
• For business owners and farmers, the changes to BPR and APR can lead to cashflow issues, especially if a business’s real asset value is high but liquid funds are low.
• If you intended wealth transfers based on previous reliefs or pensions being excluded, now is the time to revisit those plans.

Estate planning options to explore

By seeking professional advice, you can explore a range of strategies to adapt to the new landscape, some of which include:

Making lifetime gifts

Gifting assets while you are alive can reduce the size of your estate for IHT, provided you survive for the requisite period (commonly seven years). This can also be useful to shift assets into trusts or directly to beneficiaries in a planned way.

Using trusts wisely

Trusts remain powerful for control, protection and flexibility. They can help smooth the impact of the new rules – especially for business/agricultural assets.

Reviewing your will

Ensure your will reflects the current tax rules. If you have beneficiary designations (for example, in pensions), these may need updating in light of the forthcoming IHT exposure.

Order of asset depletion & pension drawdown strategy

Consider which assets to spend first in retirement versus leaving intact. Together with advice from a financial advisor, now more than ever is a time to consider what funds are used by you in your retirement or before.

Insurance options

To take advice in relation to the possibility of obtaining an insurance policy, which may if structured properly provide funds to meet IHT liabilities or protect beneficiaries, especially where assets are illiquid.

Why should you seek legal advice from experts?

Many changes (notably for BPR/APR reform and pensions entering IHT) don’t take effect immediately, which allows some time to plan for the future. However, that window is shrinking.

Estate planning is complex and each person’s situation varies depending on the mix of assets (property, pensions, business, investments), family circumstances, health status and liquidity. Getting tailored advice can save significant tax, reduce risk and allow you to sleep easier knowing your wishes will be followed.

If you’d like to arrange an estate planning review, discuss trust options, or update your will, please contact a member of our specialist wills, trusts & probate team.

Our Legal 500-rated wills, trusts & probate team has the expertise to help you plan for the future and guide you through any difficult challenges that may arise.