Vision Consulting is a London firm of Chartered Accountants regulated by the ICAEW, advising on inheritance tax planning since 2002. For 2026/27 the nil-rate band stays frozen at £325,000, business and agricultural reliefs are restructured from 6 April 2026, and most pensions come into the taxable estate from 6 April 2027, so the right time to look at this is generally now.
Where you stand this tax year
The headline figures for 2026/27, before any planning:
| Allowance or rate | 2026/27 | Frozen or effective until |
|---|---|---|
| Nil-rate band | £325,000 per person | 5 April 2031 |
| Residence nil-rate band | £175,000 per person | 5 April 2031, tapers from £2m estates |
| Annual gift exemption | £3,000 a year (1 year carry-forward) | Ongoing |
| Small gifts exemption | £250 per recipient a year | Ongoing |
| Business and agricultural relief (100%) | £2.5m combined, transferable between spouses to £5m | From 6 April 2026 |
| AIM and other unlisted shares relief | 50%, no cap | From 6 April 2026 |
| Standard rate above available allowances | 40% (36% where 10%+ of the estate goes to charity) | Ongoing |
Correct as at 26 August 2026, sourced from GOV.UK. These figures are frozen or scheduled by Finance Act 2026 and the Autumn Budget 2025; they do not move with inflation.
The five decisions that change the number
Five choices do most of the work. Each is covered in full below.
- Whether you use the £3,000 annual gift exemption every year, or let it lapse
- Whether business or agricultural assets are structured to keep 100% relief under the new £2.5 million cap
- Whether your will actually claims both nil-rate bands, including any unused allowance from a late spouse
- Whether pension drawdown has been reviewed before the estate rules change on 6 April 2027
- Whether gifts and the pattern of giving are documented well enough for HMRC to accept a claim
Which situation are you in
Different circumstances call for a different first step.
Dealing with an estateSomeone has died and I need to deal with the estateWe hold an ICAEW probate licence, so the grant and the inheritance tax account can sit with one team.See our probate service →
Giving money nowI want to give money or property to my children while I am aliveOutright gifts, the seven-year rule, and the exemptions that fall outside it entirely.Read the seven-year rule →
Business or farm ownersI own a business or farmland and want to protect it for the next generationWhat the £2.5 million relief cap from April 2026 means and how the structuring decisions work.Read the April 2026 changes →
Pension holdersI have a meaningful pension and I am not sure what changes in 2027Most unused pension funds come into the taxable estate for deaths on or after 6 April 2027.Read what changes →
HMRC has been in touchHMRC has queried a gift, a disclosure or an estateDiscreet advice on HMRC enquiries, from the accountants who also handle the estate planning behind them.See tax investigations →
Not sure where to startI just want to talk it throughA brief initial conversation is not charged.Book a call →
How inheritance tax is calculated
Inheritance tax is charged at 40% on the part of an estate that exceeds the available nil-rate bands, reduced to 36% where at least 10% of the net estate passes to charity. Unused nil-rate band and residence nil-rate band transfer to a surviving spouse or civil partner, so a couple can typically shelter up to £1 million before any other reliefs are considered.
From 6 April 2025, exposure to UK inheritance tax on worldwide assets is decided by a long-term UK residence test rather than domicile: broadly, 10 of the previous 20 tax years UK resident brings worldwide assets into scope, with a tail of three to ten years after leaving.
The tax is due six months after the end of the month of death, and probate cannot usually proceed until HMRC's position is settled.
Lifetime gifts and the seven-year rule
Gifts made in the seven years before death may reduce the nil-rate band available to the estate. An outright gift to an individual falls outside the estate entirely once you survive seven years; taper relief reduces the tax on larger gifts made three to seven years before death. Several gifts stay exempt regardless of timing: the £3,000 annual exemption, £250 small gifts, wedding gifts, and regular gifts from surplus income, the exemption HMRC challenges most often.
Trusts, growth shares and family structures
Trusts and corporate structures move value out of an estate, or cap it at its current level, while you keep control over how and when the next generation benefits. A gift into a discretionary trust is a chargeable lifetime transfer, with an entry charge of 20% above the available nil-rate band, plus ten-yearly and exit charges we model in from the outset.
Family investment companies and growth shares work differently: a new share class lets existing value stay with you while only future growth passes to your children, often at a low entry value. We also prepare written inheritance tax planning reports that model the 2026 and 2027 reforms below against your specific estate.
Business assets, AIM and the 2026 reform
Business Property Relief and Agricultural Property Relief currently let many trading businesses, qualifying shareholdings and farming assets pass free of inheritance tax. From 6 April 2026 that changes: 100% relief applies to a combined £2.5 million allowance per person, transferable between spouses to £5 million, with 50% relief above it. AIM and other unlisted shares move to 50% relief from the same date, and most trading shares still need a two-year holding period.
The reform calendar and what it means for pensions
Three changes are reshaping this area at once, all confirmed in legislation or Treasury announcement: the business and agricultural relief restructuring above from 6 April 2026, most unused pension funds and death benefits coming into the taxable estate for deaths on or after 6 April 2027, and the nil-rate bands frozen at their current levels to 5 April 2031. For anyone with meaningful pension wealth, the 2027 change is the largest inheritance tax reform in a generation.
What advice costs
A first conversation is not charged. We ask about the estate, the assets and what you want to achieve, and tell you plainly whether there is planning worth doing. If you do not need paid help, we will say so.
Beyond that, fees depend on what is actually involved: a straightforward review of allowances and a will is a different piece of work from a family investment company or a trust. We agree the scope and the fee before any chargeable work starts. We do not charge a percentage of the estate.
Frequently asked questions
Several exemptions run alongside the seven-year rule and are often overlooked. For 2026/27 you can give £3,000 a year free of inheritance tax, and carry an unused annual exemption forward one year only. Separately you can give £250 to any number of different people each year, and make wedding gifts of £5,000 to a child, £2,500 to a grandchild and £1,000 to anyone else.
The most valuable one is usually the exemption for normal expenditure out of income: regular gifts made from surplus income, which do not reduce your standard of living, fall outside the estate immediately with no seven-year wait. It is unlimited in principle, but it depends entirely on keeping records that show the pattern and the surplus, which is where most claims fail.
You can, but on its own it usually achieves nothing for inheritance tax. Where you give something away and keep the benefit of it, the reservation of benefit rules treat the asset as still yours on death, so the full value comes back into the estate. Paying a full market rent to your children is one way out of it, but the rent is then taxable income in their hands.
The gift can also make matters worse rather than better. Your children take on your original base cost for capital gains tax, they lose the main residence relief they would have had on their own home if they later live in it, and the property is exposed to their divorce or bankruptcy. This is the most common piece of do-it-yourself planning we are asked to unpick.
It is an extra £175,000 for 2026/27, on top of the £325,000 nil-rate band, available where a main residence passes to direct descendants such as children, stepchildren or grandchildren. Both allowances are frozen until 5 April 2031, and an unused amount can pass to a surviving spouse or civil partner, which is how a couple can reach £1 million between them.
You can lose it. It tapers away by £1 for every £2 by which the estate exceeds £2 million, so an estate around that level can lose the whole of it, and the taper is measured before reliefs such as business property relief are applied. It is also lost where the home passes to a niece, a nephew or a discretionary trust rather than to direct descendants, which is a trap in older wills.
No, although the tools change. Outright gifts need seven years to fall out of the estate completely, and taper relief only reduces the tax on gifts above the nil-rate band after three years, so age does narrow that route. Plenty of the rest still works at any age: making sure both nil-rate bands and any transferable allowance from a late spouse are actually claimed, using the normal expenditure out of income exemption, reviewing whether business or agricultural assets qualify for relief, and correcting a will that wastes an allowance.
Where health is a factor, the position needs care rather than avoidance, and it is better looked at early than left.
For most estates a well drafted will does the work, and a trust adds cost and administration for no tax saving. Trusts earn their place where control matters more than tax: providing for a second family, protecting a beneficiary who is young, vulnerable or going through a divorce, or holding business shares so that voting control and economic value can be separated.
They are not a way of making assets disappear. Transfers into most trusts are chargeable when made, with ten-yearly and exit charges after that, and the reservation of benefit rules apply if you keep a benefit. The question is always what the trust is for, before what it saves.
It can be. For deaths on or after 6 April 2027 most unused pension funds and death benefits come into the inheritance tax estate rather than passing outside it. Where you die at 75 or older, the beneficiary also pays income tax at their own rate on what they draw, so the same fund can bear inheritance tax and then income tax. Death in service benefits, dependants' scheme pensions from defined benefit arrangements, and anything passing to a spouse, civil partner or charity are outside the charge.
Responsibility for reporting and paying sits with your personal representatives, not the pension scheme. If your plan has been to spend other savings first and leave the pension untouched, that logic reverses, and it is worth modelling before 2027 rather than after.
Every inheritance tax guide we have written
The detail behind the sections above, one topic at a time.
GiftsInheritance Tax 7 year ruleWhat a gift actually costs if you die first, and how taper relief works.Read →
GiftsTaper relief on giftsWhen it saves tax, and when it saves nothing at all.Read →
GiftsHow much can you gift tax free?The 2026/27 allowances, and the income exemption most people miss.Read →
EstatesForm IHT403 explainedDeclaring the gifts someone made before they died.Read →
AllowancesThe residence nil-rate bandThe extra £175,000, and the ways it is commonly lost.Read →
BusinessAPR and BPR after April 2026What the £2.5 million relief cap actually means for family business owners.Read →
PensionsPension inheritance tax 2027What changes for your pension, and who becomes liable for the tax.Read →
StructuringFamily investment companiesAn introduction to the structure and when it earns its cost.Read →
EstatesHow much does probate cost?Fees, timelines and what drives the cost up.Read →
EstatesWhat does an executor do first?The first 30 days after a death, in order.Read →
EstatesCan an accountant do probate?Accountant versus solicitor, and what an ICAEW probate licence covers.Read →
Last updated August 2026 · Figures: 2026/27, sourced from GOV.UK
This is general information, not advice. Your position depends on your circumstances. Speak to us before acting.
Speak to an expert
Chloe Symmonds
Senior Manager · Inheritance tax, estates and probate
c.symmonds@visionconsulting.co.uk
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