Technical background on the post-2026 and post-2027 planning landscape

Introduction

This page summarises the UK Government's announced changes that affect inheritance tax planning from April 2026 and April 2027, and why these changes may alter some long-standing assumptions used in estate planning.

It is written as technical background and signposting, not as personal advice. The final legislation and guidance may evolve, so any planning should be checked against current law and guidance at the time action is taken.

What changes from 6 April 2026

The Government has announced reforms to Agricultural Property Relief and Business Property Relief from 6 April 2026.

In broad terms, the published direction is that full 100% relief will be capped by a new allowance, with relief above that level reduced. The Government has stated that the allowance level will be £2.5 million, and that any unused allowance may be transferable to a surviving spouse or civil partner. Separate provisions are also being developed for trusts.

A practical way to read this is that estates which rely heavily on business or agricultural relief may still obtain valuable relief, but larger estates may face a residual inheritance tax exposure above the new allowance. This can create a liquidity problem where assets are valuable but not readily saleable.

The RNRB Double-Impact Taper: A Worked Example

The RNRB taper is more punitive than it first appears because it applies on each death, not once per couple.

Example: Couple with £2.35 million estate

On first death:

• Estate value: £2,350,000
• Excess over £2m threshold: £350,000
• RNRB reduction: £350,000 ÷ 2 = £175,000
• Individual RNRB (£175,000) - reduction (£175,000) = £0
• Unused RNRB to transfer to spouse: £0

On second death:

• Estate value: £2,350,000 (assuming no change)
• Excess over £2m threshold: £350,000
• RNRB reduction: £350,000 ÷ 2 = £175,000
• Individual RNRB (£175,000) - reduction (£175,000) = £0
• Transferred RNRB from first death: £0
• Total RNRB available: £0

The result: An estate just £350,000 over the £2 million threshold loses the entire £350,000 couple's RNRB across both deaths. The excess is taxed twice through the taper mechanism — once on first death, again on second death.

How Our Calculator Handles This

For modelling purposes, our calculator applies the taper to the combined couple's RNRB as if both deaths occurred simultaneously. This gives a more generous estimate than the strict sequential-death position, but provides a reasonable planning figure for most couples.

In the example above, our calculator would show:

• Couple's RNRB: £350,000
• Taper reduction: £175,000 (£350k excess ÷ 2)
• Available RNRB: £175,000

This is still more accurate than calculators that ignore the taper entirely, but families with estates close to the £2 million threshold should be aware the actual position on sequential deaths may be worse than the calculator suggests.

Planning Implications

For couples with estates between £2 million and £2.7 million, the RNRB taper creates a particularly harsh outcome. Estate planning strategies that focus on reducing the estate value before first death (lifetime gifts, spending, charitable donations) become significantly more valuable in this band.

Alternatively, liquidity planning through Whole of Life insurance can ensure funds are available to pay the higher-than-expected IHT bill without forcing asset sales.

What changes from 6 April 2027

The Government has published proposals to bring most unused pension funds and death benefits within the value of a person's estate for inheritance tax purposes from 6 April 2027.

The published approach also states that personal representatives will be responsible for reporting and paying any inheritance tax due in relation to those pension amounts, which raises both technical and practical administration issues.

Industry technical commentary has highlighted that the change is intended to apply widely, and has also drawn attention to certain categories that are expected to remain outside scope in some cases, for example certain death in service benefits from registered pension arrangements. Any such distinctions must be checked carefully against final legislation and scheme documentation.

Implementation and administration are also a live issue. Parliamentary scrutiny has raised concerns about practical delivery, including time limits and the burden on personal representatives, with calls for clearer guidance and workable administration.

Why this matters for planning

These two changes interact in a way that is easy to miss.

From April 2026, some families who assumed that business or agricultural relief would remove most inheritance tax exposure may face a residual charge above the new allowance, even if they still qualify for relief. That pushes the conversation toward liquidity, not just asset values.

From April 2027, pensions that historically sat outside the inheritance tax net in many cases may become part of the inheritance tax calculation. For families who have built wealth in defined contribution pensions over decades, this can change the balance between retirement funding and estate planning, particularly where there are already significant assets outside pensions.

For business owners and farming families, the combined effect can be that more estates become asset-rich but cash-poor. This is precisely the scenario where liquidity planning, and coordination between professional advisers, becomes more important than product selection.

Common planning workstreams that follow from these changes

The right response varies by family and by the legal structure of assets, but the workstreams that commonly arise include:

Clarifying what is owned, by whom, and in what legal form

This includes business interests, property ownership structures, pension arrangements, and any existing trusts, because tax treatment is driven by legal form, not family intention.

Checking nominations, expressions of wish, and scheme documentation

This becomes more important if pension death benefits are moving into inheritance tax scope, and where speed and administration affect outcomes.

Liquidity planning

Where there is potential inheritance tax exposure but limited cash, planning often focuses on creating a reliable liquidity source at death, so that beneficiaries are not forced into hurried asset sales. The appropriateness of any solution depends on health, affordability, ownership, and trust structure.

Professional coordination

Where accountants and solicitors are involved, the practical objective is usually clarity of responsibilities, good client outcomes, and transparent commercial terms where work is introduced.

Next Steps

If you are an accountant, business owner, farmer, or HNW family and you want a structured discussion focused on post-2026 and post-2027 inheritance tax exposure and liquidity planning, you can request an initial conversation through our enquiry form. Where appropriate, we can then move to quotations or specialist implementation steps.

Alternatively, if you want to understand potential life insurance costs before speaking with an adviser, use our IHT Calculator to get instant indicative cost estimates based on your specific inheritance tax scenario. This allows you to model whether Whole of Life or Relevant Life insurance is financially viable for your estate before committing time to formal underwriting.