Inheritance Tax Changes 2026: What You Need to Know

From 6 April 2026, a number of changes to Inheritance Tax (IHT) are now in force – following Budget announcements in 2024 and 2025. While some rules remain the same, others have been updated in ways that may affect how estates are assessed and taxed.

Taken together, these changes mean more estates may fall within scope, and some long relied upon planning approaches may need to be revisited.

Against this backdrop, it is a sensible time to understand what has changed, what is still to come, and how the current rules may apply to your own position.

We explore the changes below:

1. Frozen thresholds remain a key factor

The core IHT thresholds have not increased and remain frozen¹ until at least April 2031:

• £325,000 nil rate band
• £175,000 residence nil rate band, where a home is passed to direct descendants

This still allows:

• Individuals to pass on up to £500,000 free of IHT
• Couples to pass on up to £1 million, where allowances are fully used

These allowances will continue to provide significant protection for many families.

However, over time, rising property values and investment growth mean more estates are likely to exceed these thresholds. This is a gradual effect, but it reinforces the importance of regular reviews.

2. Updated rules for business and agricultural reliefs

Business Property Relief (BPR) and Agricultural Property Relief (APR)² remain important elements of IHT planning, particularly for business owners and farming families.

From April 2026:

• Up to £2.5 million of qualifying assets can benefit from 100% relief
• Any value above this may receive 50% relief

For many, these reliefs will still provide substantial protection. However, for larger estates with significant business or land assets, there may now be some exposure to IHT where previously there was little or none.

This does not remove the benefits of these reliefs, but it does mean that valuations, ownership structures and succession planning may need closer attention.

3. Pensions and IHT: an important change from April 2027

Pensions have traditionally been one of the more tax efficient ways to pass on wealth, as they have typically sat outside of an estate for Inheritance Tax purposes.

However, this position is set to change from 6 April 2027³, under the Finance Act 2026:

• Most unused pension funds and death benefits will be included within a person’s estate for IHT purposes
• This means they could be subject to Inheritance Tax at up to 40%
• It is estimated that around 10,500 additional estates may become liable for IHT as a result, according to gov.uk³

This represents a notable shift in how pensions are treated. For some individuals, particularly those with larger pension funds, it could increase the overall value of their taxable estate.

That said, pensions will still play an important role in financial planning. The key difference is that they should now be considered more carefully as part of the wider estate, rather than being relied upon as being outside of it.

With time before these changes take effect, there is an opportunity to review your existing arrangements and, where appropriate, to consider how pensions sit alongside other assets and allowances.

4. How these changes may affect you and what to consider

For many families, the impact of these changes will be gradual rather than immediate.

You may wish to take a closer look at your position if:

• Your home has increased in value over time
• You have built up savings and investments alongside property
• You own a business or agricultural assets
• You have significant pension funds
• Your estate is approaching, or already above, the available thresholds

It is also worth remembering that IHT is typically charged at 40% on the value above available allowances. Even relatively small changes in how an estate is structured can therefore make a meaningful difference.

The reassuring point is that there are still a number of allowances, exemptions and reliefs available. With the right planning, many estates can manage their exposure effectively.

A sensible time to review your position

These changes are a timely reminder to take stock.

A clear understanding of your position can help ensure your estate reflects your wishes and makes full use of the available allowances.

If you would like to talk things through, here at Stringer Mann Chartered Financial Planners in Berkhamsted, we offer a no obligation conversation or a simple ‘tax health check’ to help you understand where you stand and whether any adjustments may be worth considering.

¹Inheritance Tax Thresholds - Gov.uk published November 2025

²Agricultural property relief and business property relief changes - Gov.uk updated March 2026

³Inheritance Tax on unused pension funds and death benefits – Gov.uk published July 2025

Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.  

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The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.