Cheshire law firm partner calling for early action in face of inheritance tax changes

A Cheshire-based private client solicitor is advising early action to help protect the financial future of loved ones from upcoming changes to inheritance tax (IHT).

The rules on inheriting a pension are changing from 6 April 2027, with wealth passed on when you die set to be caught in a tax net.

New directions will see pension capital added to other assets to work out the total value of an estate.

Kristel Clarke, partner and a member of the probate department at Warrington-based Watsons Solicitors, believes people should get their affairs in order nice and early to avoid changes impacting estates.

She said: “Whilst 2027 seems quite far away, it is best for individuals to act now to help protect the financial future of loved ones.

“Many of our older and wealthier clients have planned to pass unspent pensions on to their children inheritance tax free.  

“The government is consulting on the process of how these alterations will be calculated and who is to pay the inheritance tax.  

“It is likely that the pension trustees or administrators will be responsible for this, meaning extra work, cost, and most likely delays.”

There are allowances available to reduce your tax bill, depending on marriage status or who you are passing wealth to.

These include:

• £325,000 nil rate band: The basic inheritance tax nil rate band reduces the value of your taxable estate.
• £175,000 residence nil rate band: This is an additional allowance available if you leave your home to direct descendants such as your son, daughter or grandchild, so you get an additional exemption.
• Spouse transfer: There is no tax to pay on the wealth you leave to your spouse.

Most estates will continue to have no inheritance tax liability following the changes, with government estimates suggesting that out of around 213,000 that qualify, 10,500 – or about 1.5 per cent of total UK deaths – will become accountable.

Close to 38,500 estates will pay more inheritance tax than previously, with an increase of approximately £34,000 to £169,000 on average.

Kristel added: “We are already having conversations with clients regarding the changes that are set to happen.

“Our message is always the same with regards to keeping up to date with alterations and seeking professional advice to better understand the impact they could have.”

To speak to someone at Watsons Solicitors about wills and probate, please contact enquiries@watsonssolicitors.com or call 01925 571 212.

Watsons Solicitors, which has been established for more than 60 years, specialises in family law, employment law, wills and probate, and conveyancing.

The team of experienced solicitors holds various accreditations and memberships of professional bodies relevant to their expertise, while the firm’s partners oversee all areas of work.