In May, we were joined by Baroness Ros Altmann, former Pensions Minister and one of the UK's leading voices on retirement policy, for a CPD-accredited webinar for our network of independent financial advisers.

The session explored the evolving landscape of estate planning in the wake of significant policy and tax changes affecting pensions, Venture Capital Trusts (VCTs), inheritance tax (IHT), business reliefs and retirement planning.

With advisers and their clients adapting to a new level of complexity, the discussion focused on the practical implications of recent reforms, and the strategies individuals and advisers need to consider in response.

There was a great deal to take away from the session, and we wanted to share four of the key themes that emerged.

1. Changes to Business Property Relief and Agricultural Property Relief require urgent planning reviews

From April 2026, the 100% relief available under Business Property Relief (BPR) and Agricultural Property Relief (APR) is now capped at £2.5m per person (or £5m for a couple), with assets above that threshold subject to a 20% inheritance tax charge.

While most clients will continue to benefit from full relief within those limits, those with larger estates or family businesses will need to review their succession planning structures without delay.

Baroness Altmann highlighted the potential liquidity issues this creates, particularly where a 20% tax liability must be settled within six months of death, and noted that wills, trusts, and insurance arrangements may all need to be revisited in light of the changes.

2. Pension IHT changes could produce effective tax rates of up to 67% and will be administratively complex

From April 2027, unused pension funds will be subject to IHT. Combined with income tax on inherited drawdown pots, effective tax rates of up to 67% are possible in some scenarios – a change in policy that Baroness Altmann expressed particular concern over.  

Beyond the financial impact, she highlighted the administrative burden the proposals place on grieving families acting as personal representatives, who may face penalties and interest charges for failing to navigate a highly technical process under tight timeframes.

In this context, advisers have an important role in helping clients prepare now, whether by ensuring pension nominations are up to date, identifying potential tax liabilities in advance, or making sure clients and their families understand what the process is likely to involve.

3. VCTs and EIS remain relevant planning considerations, but the balance of planning has shifted

Notwithstanding the wider changes to the tax landscape, significant reliefs remain available through VCTs and EIS, although these involve higher-risk investments and may not be suitable for all investors. VCTs continue to offer 20% income tax relief on investments up to £200,000 per year, along with tax-free dividends, subject to qualifying conditions. EIS investments offer up to 30% income tax relief, and although their income is not tax free, they do enable CGT deferral and, where the company qualifies, IHT relief after two years. Recent rule changes also allow qualifying companies to raise more capital under the scheme than before.

Baroness Altmann noted that – with the attractiveness of pensions reduced by the forthcoming IHT changes – advisers may increasingly want to consider whether VCTs and EIS fit into broader portfolio and estate planning conversations for suitable clients, particularly for clients looking to manage CGT, reduce estate values, or diversify tax relief strategies.

4. Advisers should build more flexibility and liquidity into client plans, and keep a close eye on future changes

A clear message from the session was that the current period of reform is far from over. Further changes to the gifting regime, pension tax relief and other areas remain possible, and regulatory detail on existing measures is still being finalised. Baroness Altmann urged advisers to move away from set-and-forget approaches and build more regular reviews, greater flexibility and adequate liquidity into client plans.

Practically, this may mean a greater focus on inter-spouse transfers, gifts from surplus income, life assurance to cover IHT liabilities, and a reassessment of when and how clients draw down pension assets. Annuities, particularly fixed-term arrangements, were also highlighted as more attractive these days in the higher interest rate environment, especially where clients want to reduce their exposure to pension IHT.

Important notice: This article is intended for information purposes only and does not constitute investment or tax advice. Tax treatment depends on individual circumstances and tax rules may be subject to change in the future. Investments in VCTs, EIS and BR-qualifying assets involve risk, including possible loss of capital, and may be illiquid. Reliefs depend on qualifying conditions being met and maintained.