Families running out of time to prepare for inheritance tax changes

The UK is on the brink of a number of key changes to its inheritance tax regime. Azets’ national head of private client services, Richard Major, has urged people to think ahead before the shake-up comes into force in April.

Azets is an international business advisory group, with 9,000 local experts in 190 locations across eight countries, backed by progressive technology. The firm has three offices in Yorkshire, in Leeds, Bradford and York, where it employs 335 people.

According to the firm, it has been inundated with enquiries following the government’s overhaul of the tax (IHT). The changes include restrictions to agricultural and business property reliefs from April 2026, and the extension of IHT to unspent pension pots at death from April 2027.

Families in Yorkshire considering how to avoid being eligible for a higher threshold of inheritance tax now only have a small window left to act. According to Leeds-based Richard Major, partner and national head of private client services at Azets, there are “thousands of families in Yorkshire and the UK with estates worth more than the IHT threshold of £650,000 thanks to accumulated savings, investments, pensions, raises in asset values, such as property, with many owning businesses as well which have significant value.”

“If considered and compliant steps aren’t taken, they would need to hand over up to £400 in every £1,000 of their wealth to the Treasury. While the reforms will not take effect until 6 April, they are expected to have far-reaching consequences for many individuals and families. In most cases, IHT liabilities are expected to rise, making early planning essential for business owners, farmers and individuals with pension savings.

“Against this backdrop, we’ve been inundated with concerned callers unsure how to proceed – and frustrated that a large chunk of what is their private wealth is in effect earmarked by the state for public money down the line, having already paid taxes over their working lifetimes. Enquirers are now close to the point where they are starting to run out of time to make changes by the start of the next tax year, particularly if they are thinking of transferring shares in a trading business or putting a farm into a trust, to get the valuations done and the transfers across.

“It would be full-on for advisors, and we know solicitors and conveyancing firms will be particularly busy before next April so there is a danger of delays which could scupper matters. Changing how your estate is handed on following your death is complicated - and no-one wants to leave loved ones with the stress of financial liabilities. Also worth bearing in mind - HMRC non-compliance checks and investigations are on the rise.”

Major explained, “A look at HMRC’s IHT data for 2022-23 shows that 12,000 estates had £1m in cash and a further 4,500 estates had £2 million in cash or above – cash which was clearly going to fall under IHT. Overhaul of the IHT regime, with draft legislation published in July 2025, includes key areas of change, such as, based on latest HMRC tax-year figures for 2022-23, 4.6% of UK deaths resulted in an IHT charge, with 31,500 estates paying the tax, with £6.7 billion raised, up by £0.7 billion from the previous tax year.”

According to HMRC, the average effective tax rate paid by taxpaying estates was 13%, compared to the headline marginal rate of 40%, reflecting the impact of exemptions, reliefs and tax-free allowances. The largest exemption set against assets were transfers between spouses and civil partners in 2022-23; nearly £6 billion was reported to HMRC as being transferred to surviving spouses and civil partners on death.

The combined value of agricultural and business property relief (APR, BPR) set against assets was £5.28 billion; the value of BPR claimed rose by £0.49 billion (17%), whilst the value of APR claimed rose by £0.37 billion (24%). The value of exempted transfers to qualifying charities was £1.92 billion. In Yorkshire and the Humber, there were 1,460 estates, with tax liability of £237m in 2022-2023, according to the HMRC.

“In these HMRC figures, you can see how tax reliefs for APR and BPR have helped protect wealth,” said Major.