INHERITANCE TAX RULES ARE CHANGING

INHERITANCE TAX PLANNING SERVICES

Inheritance Tax rules are changing — and some changes are already underway. Reforms began in October 2024, with further restrictions to Business and Agricultural Relief taking effect from April 2026. Pension changes follow in April 2027.

The sooner you start planning, the more opportunities you’ll have to protect your wealth and pass it on efficiently. Not sure where to begin? That’s where we come in. Our inheritance tax specialists provide clear, practical advice tailored to you.

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WHY CHOOSE AAB FOR IHT ADVICE

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Partner-led advice from day one

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Holistic tax, trust, & wealth planning from one team

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Safeguard your business

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Protect your assets

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Plans built for the long term

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Personal advice tailored to you

WHAT ARE THE INHERITANCE TAX CHANGES?

From April 2026, key changes will be made to how Business and Agricultural Reliefs for IHT will operate.

The current 100% relief was originally planned to be capped at £1 million per person, with any value above this threshold obtaining only 50% relief, meaning individuals could be hit with a much bigger inheritance tax (IHT) bill than previously anticipated.

However, on 23 December 2025 the Government softened the IHT changes for business owners/farmers as they announced that they will increase the limit for full relief from £1 million to £2.5 million, with value above that obtaining  50% relief.

Could this affect you? With new rules for inheritance tax coming into effect, now is the time to review your estate and prepare for budget changes to avoid unexpected IHT charges.

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AAB man on laptop listening and smiling

WHAT ARE THE INHERITANCE TAX CHANGES?

From April 2026, key changes will be made to how Business and Agricultural Reliefs for IHT will operate.

The current 100% relief was originally planned to be capped at £1 million per person, with any value above this threshold obtaining only 50% relief, meaning individuals could be hit with a much bigger inheritance tax (IHT) bill than previously anticipated.

However, on 23 December 2025 the Government softened the IHT changes for business owners/farmers as they announced that they will increase the limit for full relief from £1 million to £2.5 million, with value above that obtaining  50% relief.

Could this affect you? With new rules for inheritance tax coming into effect, now is the time to review your estate and prepare for budget changes to avoid unexpected IHT charges.

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Pension & IHT planning under one roof

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Partner-led, People Focused

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Advice for the long-term, not just a single tax year

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WHY INHERITANCE TAX CHANGES SHOULD MATTER TO YOU

The upcoming IHT changes could significantly increase the tax burden on business owners, farming families and those with substantial estates.

From 6 April 2026, changes to Business and Agricultural Relief mean qualifying assets may no longer be fully protected. From April 2027, pension funds will also fall within the scope of inheritance tax.

Without careful IHT planning, this could create unexpected liabilities running into hundreds of thousands or even millions of pounds — and serious cash flow pressure at an already difficult time.

For example, if Mr X owns qualifying business or farming assets valued at £5 million:

  • If he dies before 6 April 2026, no IHT may be payable.
  • If he dies on or after 6 April 2026, an IHT liability of up to £500,000 could arise.

Pre 6 April 2026 (£)

Post 5 April 2026 (£)

Value of qualifying assets

5,000,000

5,000,000

Relief @ 100%

(5,000,000)

(2,500,000)

Relief @ 50%

N/A

(1,250,000)

Taxable value

NIL

1,250,000

Tax @ 40%

NIL

500,000

That’s a £500,000 liability where none previously existed.

Add pension changes into the mix, and estates that once looked secure may now face a much larger IHT exposure.

While HMRC allows IHT to be paid in instalments over ten years, this can still place pressure on business or family finances and may force difficult decisions.

With the right advice, these IHT changes can often be managed. At AAB, we help families review exposure, protect reliefs and put practical plans in place before the rules tighten further.

 "AAB’s Private Client team took the time to understand our family’s needs and provided clear, actionable tax advice. Their guidance alleviated any concerns, helping us plan effectively for the future. I highly recommend their services to other business owners seeking peace of mind regarding their tax affairs." 

ALEX

WHY HASN'T IT CHANGED?

While the recent IHT changes are significant, much of the wider inheritance tax framework remains in place.

The standard nil rate band of £325,000 still applies. The residence nil rate band remains available where conditions are met. Lifetime gifting exemptions continue. Trust planning remains a valuable tool. And Business and Agricultural Relief still exist — albeit with new limits from April 2026.

This means careful, proactive planning can still make a real difference.

The focus now is on reviewing how existing reliefs interact with the new rules — and adjusting structures where needed. For many families, it’s not about starting from scratch. It’s about refining what’s already there.

With the right advice, you can build a plan that works under today’s rules and is resilient to the changes ahead.

An image of Charlotte Robertson wearing a green cardigan and smiling at the camera.
An image of Charlotte Robertson wearing a green cardigan and smiling at the camera.

WHY HASN'T IT CHANGED?

While the recent IHT changes are significant, much of the wider inheritance tax framework remains in place.

The standard nil rate band of £325,000 still applies. The residence nil rate band remains available where conditions are met. Lifetime gifting exemptions continue. Trust planning remains a valuable tool. And Business and Agricultural Relief still exist — albeit with new limits from April 2026.

This means careful, proactive planning can still make a real difference.

The focus now is on reviewing how existing reliefs interact with the new rules — and adjusting structures where needed. For many families, it’s not about starting from scratch. It’s about refining what’s already there.

With the right advice, you can build a plan that works under today’s rules and is resilient to the changes ahead.

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Clear answers when it matters most

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By your side, through every stage

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Joined-up advice you can rely on

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HOW TO STAY AHEAD OF INHERITANCE TAX CHANGES

Despite the challenges presented by the changes to inheritance tax, there remains a window of opportunity between now and 5 April 2026 to potentially mitigate their impact. 

Our inheritance tax specialist team will review your current IHT exposure and assess how it could affect your estate.  We can then work with you to identify strategic tax planning opportunities, some of which are highlighted below.

AAB’S PRACTICAL APPROACH TO THE NEW INHERITANCE TAX RULES
  1. Review your assets and business structure to ensure they qualify for Business Relief (BR) and Agricultural Relief (AR), and make any necessary adjustments.
  2. Revisit your Will to ensure your estate planning is effective, including the transfer of BR/AR allowances to a surviving spouse.
  3. Maximise individual BR/AR allowances by structuring affairs and lifetime transfers to meet qualifying ownership requirements.
  4. Plan succession now to pass value to the next generation while taking advantage of current rules.
  5. Consider using trusts to protect assets for future generations while retaining control, with planning completed before 6 April 2026.

“AAB’s seamless service across tax and wealth planning has given me and my family complete peace of mind. Their proactive approach, coupled with their in-depth expertise, ensures our long-term tax and financial goals are met. I highly recommend AAB for a comprehensive, all-encompassing financial solution.”-

NIALL

NAVIGATING YOUR OPTIONS FOR IHT PLANNING AND RELIEFS

When it comes to IHT planning, there is a range of options and reliefs available that can be tailored to your circumstances to help protect and pass on your wealth efficiently. Choosing the right combination of strategies can make a significant difference - here are the principal routes to consider. 

 

NAVIGATING YOUR OPTIONS FOR IHT PLANNING AND RELIEFS

 When it comes to IHT planning, there is a range of options and reliefs available that can be tailored to your circumstances to help protect and pass on your wealth efficiently. Choosing the right combination of strategies can make a significant difference - here are the principal routes to consider. 

 

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1. TRUSTS FOR IHT PLANNING

Trusts play an important role in family asset protection and estate tax planning.

If your estate is worth more than the current IHT nil rate band of £325,000 (£650,000 for married couples) then it makes sense to explore whether you could benefit from using trusts to mitigate inheritance tax.

Our trust team specialises in providing bespoke advice on the use of trust structures to safeguard wealth, ensuring your longer-term estate planning objectives are met and any available tax advantages are secured.

2. LIFETIME GIFTING

We can help you make the most of lifetime gifting as part of a broader inheritance tax planning strategy.

We’ll review your estate to identify opportunities to transfer value to family members or other beneficiaries in a tax-efficient way, while ensuring your own financial needs are met.

Our team can advise on the timing, structure, and amounts of gifts to maximise exemptions and reliefs, helping future-proof your IHT planning strategy.

An image of Daniel, Lewis and Erica sitting at a desk with their laptop and notebook. They are having a a conversation.
An image of Daniel, Lewis and Erica sitting at a desk with their laptop and notebook. They are having a a conversation.

2. LIFETIME GIFTING

We can help you make the most of lifetime gifting as part of a broader inheritance tax planning strategy.

We’ll review your estate to identify opportunities to transfer value to family members or other beneficiaries in a tax-efficient way, while ensuring your own financial needs are met.

Our team can advise on the timing, structure, and amounts of gifts to maximise exemptions and reliefs, helping future-proof your IHT planning strategy.

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3. PENSIONS AND INHERITANCE TAX

A large, unspent pension could become a significant IHT burden for your heirs. Taking income from your pension and making lifetime gifts can help reduce the tax your beneficiaries might face. Pensions currently benefit from an IHT exemption, making them a powerful tool for passing wealth to the next generation. However, from April 2027, this exemption will be removed, changing the way retirement and estate planning must be approached.

Speak to an IHT specialist to explore your gifting options and make the most of your pension income while protecting your estate.

OUR EXPERIENCED PRIVATE CLIENT CONSULTANTS

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PAULA FRASER

HEAD OF PRIVATE CLIENT SERVICES

Paula Fraser is a Tax Partner and Head of Private Client at AAB, advising entrepreneurs, family businesses, and high-net-worth families on IHT planning and estate tax strategy. She provides holistic, relationship-driven advice focused on protecting family wealth across generations. Known for her calm, honest approach, Paula works closely with families to understand what really matters to them. Her inheritance tax advice is always practical, clear, and built around long-term outcomes for the wider family.  

JILL WALKER

PRIVATE CLIENT PARTNER

Jill Walker is a Private Client Partner based in AAB’s Aberdeen office, specialising in inheritance tax advice, trusts, and tax structuring. She works with individuals, business owners, and families to help preserve wealth and plan confidently for the future. Jill is proactive and always one step ahead of tax changes. She takes time to understand family dynamics and believes there are no silly questions, offering clear, responsive advice when clients need it most.  

GUNHILD DAM

PRIVATE CLIENT PARTNER

Gunhild Dam is a Private Client Partner at AAB. Based in our Leeds office, she leads and oversees the work of the Private Client Team, ensuring that the team is set up for success with the right people in the right places to help our clients achieve their goals.  

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TOM ANDREW

PRIVATE CLIENT DIRECTOR

As a Director within our Private Client team, Tom Andrew specialises in undertaking bespoke tax advisory projects for a wide range of clients, from advising internationally-mobile executives on residence issues to advising family businesses on succession planning and restructuring.  

MARK MCCLUSKEY

SENIOR TAX MANAGER

Mark McCluskey is a Senior Tax Manager and is a member of the Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT). Based in our Ireland office, Mark looks after the tax compliance of High Net Worth Individuals, many of whom have cross-border issues between the UK and ROI. Mark also works on tax advisory projects such as business succession or IHT planning. Although Mark primarily specialises in Personal Tax, he is also experienced in other areas of tax, including Corporation Tax.  

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CLEAR INHERITANCE TAX ADVICE. PERSONAL SUPPORT. PEACE OF MIND

Plan ahead for the inheritance tax changes and protect what you’ve worked hard to build. Our specialists take the time to understand your assets, family circumstances and long-term goals, providing clear, practical advice and tailored planning strategies you can act on with confidence — now and for the future.  

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