By James Kenward; Independent Financial Adviser
A recent Opinium report reveals a striking lack of awareness among the 8.5 million people aged 55+ who could be impacted by Labour’s first budget. Key changes include the inclusion of pension benefits in estates for Inheritance Tax (IHT) from April 2027 – a move projected to double the number of estates subject to IHT and raise £1.46 billion annually by 2029/2030.
Despite widespread press coverage, only 6% of adults over 55 have adjusted their financial plans, and 40% remain unaware of the changes. The report also highlights poor knowledge of existing gifting rules that could help reduce IHT liability:
- 79% are unaware they can give up to £250 per person to multiple individuals without triggering IHT.
- 78% do not know that certain gifts for occasions like birthdays or Christmas are exempt.
- 65%a re unaware that gifts between spouses areI HT-free.
- 62% are uninformed about the Annual Exemption, which allows £3,000 in tax-free gifts per year, with unused allowances transferable to the next year.
- 53% do not know that gifts may be exempt if the donor lives at least seven years after giving.
Effective IHT planning requires open family discussions, ideally led by a SOLLA-accredited financial adviser. Families who plan proactively often reduce or eliminate IHT burdens entirely.
Without preparation, many estates could face increased tax liabilities. Seeking professional advice is crucial, especially regarding pension IHT changes. Options like gifting, trusts, or IHT-free investments can significantly mitigate tax burdens.
Remember, IHT is often referred to as a voluntary tax, paid only by families who fail to act.
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