Inheritance Tax – Further Changes on the Horizon

Posted on 14 August 2025 in Tax, Trusts & Succession

The Government has recently signalled its intention to introduce further reforms to inheritance tax, as part of its broader fiscal strategy. Media reports have described these proposals as an “inheritance tax grab”, with measures aimed at increasing revenue by bringing more estates within the scope of inheritance tax.

Key Proposed Changes

Among the most significant changes under discussion is a potential cap on lifetime gifts. At present, individuals can make gifts of unlimited value during their lifetime, with the amounts falling outside their estate for inheritance tax purposes if they survive for seven years from the date of the gift. The proposed reform would place a fixed lifetime limit, beyond which any further transfers could become taxable immediately, regardless of the donor’s survival period. This would restrict a long-standing planning strategy, particularly for those wishing to transfer significant assets to the next generation during their lifetime and could substantially increase the eventual inheritance tax bill.

The long-anticipated change to the treatment of pensions, currently scheduled for April 2027, would also bring certain pension pots into the taxable estate for the first time, removing a valuable planning tool. Coupled with the continued freeze on the nil-rate band (£325,000) and the residence nil-rate band (£175,000), rising asset values mean that many more estates will be affected.

Impact on you

Those with higher-value estates, substantial pension funds, or established gifting strategies are likely to be most impacted. Business owners and those holding agricultural property should also take note, recent reforms have already reduced the scope of available reliefs, and any further restrictions may require significant adjustments to succession plans.

How Tozers Can Help

While the detail of the reforms is still to be confirmed, forward planning remains essential. Our specialist Tax Trust and Succession team can help you review your arrangements, considering the timing and structure of lifetime gifts, exploring alternative wealth transfer methods, reviewing pension arrangements in conjunction with financial advisers, and ensuring that wills and other estate planning tools remain fit for purpose.

Taking advice early will give you more options and greater flexibility to respond to any changes. If you are concerned about how these proposals could affect you or your family, please contact our team for tailored guidance.

Contact our legal experts

Gráinne Staunton

Posted by
Gráinne Staunton
Partner & Solicitor / Head of Private Wealth

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Inheritance Tax – Further Changes on the Horizon

Key Proposed Changes

Impact on you

How Tozers Can Help

Recent cases

Wills and Succession Advice

Inheritance Tax & Succession Advice

Significant Inheritance Tax Savings

Agricultural Property Relief

Business Property Relief

Unpicked Complex Trust Provisions

Estate Administration and Tax Planning

Estate Administration

Estate Planning

Interpreting Unusual Trust Provisions

What our clients say

Latest insights