Caroline Foulger explores the impact of new pressures on family estates in Taxation
Caroline’s comments were published in Taxation, 09 October 2025, and can be seen here.
Caroline Foulger, Partner in our Private Client department, explores the growing complexities families face in managing inheritance tax (IHT) liabilities.
From April 2027, most unused pension pots will be included in IHT calculations, significantly widening the scope of the tax. This shift means that even households with modest wealth particularly those with property and pensions may face substantial IHT bills, challenging the notion that IHT only affects the very wealthy.
The article outlines how traditional planning tools such as pension freedoms, lifetime gifting, and trusts are being reassessed. Strategies like gift and loan trusts, life insurance, and nil-rate band discretionary trusts are regaining relevance, especially as pensions lose their previous IHT-exempt status. Caroline notes that while these tools offer mitigation opportunities, they must be balanced against future care needs and the unpredictability of later-life expenses. Planning early and integrating multiple approaches is now more important than ever.
Caroline also highlights the importance of family-wide conversations around estate planning. With changing family structures, differing views on inheritance, and varying financial pressures across generations, open dialogue is essential. She stresses that gifting decisions should be informed by both financial analysis and personal values, and that advisers play a key role in facilitating these discussions. The emotional and practical dimensions of inheritance planning are just as critical as the technical ones.
Ultimately, Caroline argues that while the options for mitigating IHT may be narrowing, proactive and phased planning can still make a meaningful difference. The inclusion of pensions in the IHT net marks a turning point, making estate planning a priority for many more families. By engaging early, reviewing strategies regularly, and involving all relevant parties, families can better navigate the evolving tax landscape and protect their legacies.
Read the full article on the Taxation website [subscription required].