By 2030, Vanguard reveals that an estimated $18.3 trillion in wealth will be transferred globally between generations, with a projected £7 trillion in the UK alone [1]. 

This 'great wealth transfer' is being driven by the 'perfect storm' of an ageing population, rising asset values across the board, and increasing life expectancies.

Whether you’re still accumulating your wealth, thinking about retirement, or even already enjoying it, it’s vital to understand how this transfer of wealth could affect your loved ones, particularly in regard to Inheritance Tax (IHT).

You could threaten your loved ones’ financial security by failing to plan for Inheritance Tax.

You’ve likely spent years accumulating wealth to enjoy your retirement and support your loved ones after you’re gone. Yet, without careful planning, you could forfeit a considerable portion of your estate to IHT.

In 2025/26, the “nil-rate band” – the amount you can pass on free from IHT – stands at £325,000. 

If you leave your primary residence to a direct lineal descendant, you can use the “residence nil-rate band” of £175,000, creating a potential £500,000 tax-free threshold. 

Better yet, if you’re married or in a civil partnership, you can combine your allowances. So, you and your spouse or civil partner could potentially pass on £1 million without facing IHT. 

While this might seem generous, you may be closer to the thresholds than you think, especially once pensions start to form part of your estate from 6 April 2027, as announced in the 2024 Autumn Budget.

Any value above your nil-rate bands could be taxed at 40%, reducing the wealth your loved ones receive from your estate. 

Inheritance Tax rules for farmers changed in the Autumn Budget

Recent changes announced in the Autumn Budget make IHT planning even more important for landowners and the farming community.

The new chancellor, Rachel Reeves, confirmed changes to Agricultural Property Relief (APR). Currently, APR allows you to pass on agricultural property – including land or pasture used to grow crops or rear animals – with 100% IHT relief.

However, from April 2026, only the first £1 million of combined qualifying business and agricultural assets will be entirely exempt from IHT.

Anything above this will receive 50% IHT relief, effectively resulting in a 20% charge.

Since land tends to be valuable, this could significantly increase the IHT burden for the families of farmers and business owners, making early planning essential. 

3 ways to mitigate a potential Inheritance Tax bill
While IHT can seem daunting, several strategies may help reduce the amount your estate faces – here are three.

• Use your gifting allowances
  Each year, you can make IHT-free gifts under your “annual gifting exemption”. In 2025/26, the annual exemption is £3,000.
  
  If you haven’t used the previous year’s exemption, you can carry it forward for one year.
  
  While you can make larger gifts, be mindful of the “seven-year rule”. Gifts above the exemption made within seven years of your passing may still be subject to IHT.
  
  It’s important to only gift what you can afford so you don’t affect your standard of living in later life.
  
  
• Place your wealth in trusts
  A trust is a legal arrangement that allows you to manage how and when your assets are distributed, potentially helping to reduce the value of your estate and your beneficiaries’ IHT liability.
  
  Trusts could also help you control how your wealth is passed on. For example, you can specify that children can only access funds at a certain age or for specific purposes, such as higher education.
  
  Bear in mind that creating a trust is typically irrevocable. Be sure of your decision before you put assets in trust.
  
  
• Work with a financial planner
  Estate and IHT planning is complex, and mistakes could prove costly for you or your family.
  
  Working with a financial planner can make a difference. We can create a bespoke plan that helps you manage your IHT liability and ensures your loved ones can benefit as much as possible from your legacy.

Get in touch
If you’d like support preparing for your own wealth transfer, please don’t hesitate to get in touch. Email [email protected] or call 0800 048 0150.

Please note
The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, or trusts.

Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.

Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.

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