One of the key concerns for clients of solicitors and financial planners is how to ensure their beneficiaries are supported by the legacy they’ll leave behind.

These concerns have increased in recent years as Inheritance Tax (IHT) receipts have continued to rise, and with reforms set to come into effect in 2026 and 2027, the scope of IHT will expand even further.

Data published by Statista shows that IHT receipts have reached record levels for four consecutive tax years. In 2024/25, revenues totalled £8.25 billion, and the latest projections suggest next year will be even higher.

So, with IHT already at historic highs and set to rise further, clients may need to review and adjust their estate plans to ensure their wealth is passed on efficiently and in line with their wishes.

Read on to find out what the upcoming reforms entail and how financial planners and solicitors can collaborate to help.

Reforms to Business Relief and Agricultural Relief will come into effect in April 2026

Business Relief (BR) and Agricultural Relief (AR) are IHT reliefs that reduce the taxable value of qualifying assets passed on after death. The rules regarding both are set to change in 2026.

The current rules

BR is available to people who have held qualifying assets for at least two years and held them when they died.

100% BR is available for:

• A sole trader or partner interest in a trading business
• Shares held in an unquoted company, including shares listed on the Alternative Investment Market (AIM)
• Enterprise Investment Schemes (EIS).

50% BR is available for:

• Shares controlling more than 50% of a quoted company
• Land, buildings, machinery, or plant used wholly or mainly for the purposes of the business.

AR is available to individuals who own farmland and have either lived on and farmed the land for at least two years or owned the land for at least seven years while it’s been farmed by someone else.

100% AR is available:

• If the land is actively farmed by the owner or let under a qualifying tenancy.

50% AR is available:

• If the land is owned but not directly farmed by the owner.

Changes from April 2026

Under the new system, individuals will have a £1 million allowance for the combined value of assets that qualify for 100% AR and 100% BR. Anything that would have qualified for 100% relief over this threshold will receive 50% relief instead.

Shares in companies designated as “not listed” on the markets of recognised stock exchanges (including AIM-listed ones) will only be entitled to relief at 50%.

Pensions are set to be brought into the scope of Inheritance Tax from April 2027

In addition to the reforms to AR and BR, pensions will be brought into the scope of IHT from April 2027.

This is a significant development. The UK government estimates that almost 50,000 estates will be affected, with 10,500 estates set to become liable for IHT for the first time, and around 38,500 to face a higher bill than they would have.

While only some of your clients will have investments or assets that qualify for BR or AR, they will all likely have a pension. Indeed, many may have made additional contributions to help improve the efficiency of their estate.

This change could open up a far bigger portion of clients’ estates to IHT and could also mean many of them miss out on the residence nil-rate band, which tapers on estates valued over £2 million.

How solicitors and financial planners can help

With upcoming changes expected to bring more estates into the scope of IHT and increase liabilities for those already affected, it’s important for clients to review their estate plans now to remain tax efficient.

Financial planners and solicitors can play a key role in this process, and close collaboration between the two professions can help ensure clients’ strategies remain fully aligned.

Financial planners can help clients:

• Review their assets to identify any that may lose full BR or AR eligibility after April 2026
• Ensure they make the most of their available allowances
• Incorporate their pensions and investments into their wider estate plan, ensuring beneficiaries are named and all tax implications are understood
• Explore alternative estate planning strategies, such as gifting and putting assets in trust, to help improve their efficiency
• Model different scenarios to show how the upcoming rule changes could affect the value of their estate and its potential IHT liability.

Solicitors can help clients:

• Update their wills to ensure they make the most of their allowances and their wishes are clear
• Ensure their trust arrangements reflect the IHT reforms
• Remain compliant with the new rules while making changes to their estate plans.

By working together, our sectors can help clients minimise their IHT exposure, stay ahead of reforms, and create a joined-up plan that reflects their wishes while remaining efficient and compliant.

Get in touch

To find out more about how our sectors can work together for the benefit of our mutual clients, get in touch.

Email info@blueskyifas.co.uk or call us on 0118 987 6655.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, trusts, or will writing.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.