Inheritance Tax Planning: What’s Changing in 2026

Staying on top of changes to Inheritance Tax (IHT) is a crucial component of effective wealth preservation, particularly in light of the UK Government’s reforms over the past year.  

 

At Glaisyers ETL, we provide guidance on all aspects of IHT legislation, helping you plan your wealth so it’s protected and passed on as intended.

What’s changing  from 2026?

The Autumn Budget brought several important developments that will significantly affect IHT planning for individuals, families, and business owners.

Agricultural and Business Property Relief Reforms

Last Autumn’s budget proposed a £1 million limit on relief for agricultural and business property. After much campaigning from affected groups, the limit was increased to £2.5 million per individual. Regardless of this increase, the limit represents a significant overhaul from current regulations, as qualifying business and agricultural assets currently receive 100% relief from IHT; this will change from 6 April 2026.  

 

The November 2025 budget softened regulations around this cap, meaning that from 6 April 2026, any unused portion of the £2.5 million allowance can be transferred between spouses or civil partners. Even if one spouse died before the changes take effect, their unused allowance can still be applied, allowing a surviving spouse’s estate to benefit from up to £5 million of qualifying relief.

 

Importantly, this transfer applies only after both spouses have passed and only if the first spouse did not fully use their allowance. It is a transfer between estates, not something the surviving spouse can claim while their partner is still alive.

Continued freeze on Inheritance Tax thresholds

The Budget also confirmed the planned freeze on IHT nil-rate bands at £325,000 has been extended by a further year to April 2031. This extra year of frozen thresholds means more estates will become liable for IHT in the coming years as asset values continue to rise.

Reducing your Inheritance Tax

Effective Inheritance Tax planning means starting early, seeking tailored advice, and regular reviewing. Two of the most used strategies are lifetime gifting and trust planning.  

 

Lifetime Gifting

Lifetime gifting can be an effective way to reduce the value of your taxable estate by transferring money or assets to a beneficiary while you are alive. Gifts made to children or friends are classed as Potentially Exempt Transfers (PETs), if you survive for 7+ years after the date it is given then it won’t count towards your estate for IHT purposes.

  

Gifts to a spouse or civil partner are usually fully exempt from IHT, regardless of how long you survive.  

 

Trust Structures

Trusts work by removing assets from your personal estate during your lifetime. Once in a trust, these assets legally belong to the trustees, which can potentially reduce the value of your personal estate.

 

There are many types of trust, and finding the right one for you can be a complex process. The Private Client team at Glaisyers ETL can help simplify your decision and offer expert advice on which trust will be most beneficial for you.  

 

Common Inheritance Tax Misconceptions 

There are some common misconceptions around IHT that, if not addressed, can lead beneficiaries to receive far less than they expected.

 

IHT Only Affects the ‘Super Rich’ 

Due to frozen tax-free thresholds and rising asset values, more people than ever are finding their estates liable for IHT. 

 

Once I Give an Asset Away, It Is Outside of My Estate  

Gifts where the donor continues to benefit (such as a house in which they live rent-free) are considered ‘Gifts with Reservation of Benefit’. This means that the assets remain part of the donor’s taxable estate, even though legal ownership has passed to someone else. 

 

Overseas Assets Are Not Subject to UK Inheritance Tax 

If you are a UK-domiciled individual, your entire estate – including assets abroad – will still potentially be subject to UK IHT, including foreign property, investments, and bank accounts.  

 

Recent rule changes mean that an individual’s UK domicile status can now be influenced by the number of years they have lived in or outside the UK. Anyone who has lived, or plans to live, abroad should ensure they understand these new rules and how they may affect their estate planning. 

 

Inheritance Tax Planning is a One-Time Event 

As tax laws, asset values, and personal circumstances change over time, IHT planning should be reviewed regularly to ensure wills and strategies remain effective and compliant.

 

Let us help you protect and preserve your wealth for generations to come.

Take proactive steps to secure your family’s financial future. Contact our Private Client team today to schedule your confidential consultation and receive tailored guidance on how changing IHT rules could impact you.