Ingenious Insights

IHT receipts are expected to hit £8.7 billion in 2025/26 and are forecast to exceed £14 billion by 2030/31*. With the nil rate band frozen until 2031, more estates are falling into scope every year. Three significant rule changes — announced at the 2024 Autumn Budget and now in force — mean strategies that worked for clients last year may no longer be sufficient.

Business relief cap in force now
From 6 April 2026, 100% business relief is capped at £2.5 million of combined qualifying assets per individual (£5 million per couple). Assets above this threshold receive only 50% relief, meaning the remaining 50% is subject to IHT at 40% (an effective charge of 20% on the excess).

AIM portfolios only qualify for 50% relief now
AIM shares now receive a flat 50% relief on their entire holding, with no allowance available. This creates an effective 20% IHT charge on assets that were previously fully exempt after a two-year holding period. Clients with AIM-based IHT strategies need to reassess.

Pension pots are entering the taxable estate in 2027
From April 2027, unspent defined contribution pension pots will fall within the taxable estate for the first time. Clients who have historically left pensions untouched as a legacy planning tool will need a fundamental rethink of their approach before the change takes effect.

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*Office for Budget Responsibility, 9 February 2026: https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/inheritance-tax/