The UK’s probate and inheritance tax (IHT) landscape are undergoing significant changes, with reforms set to impact estate planning, tax liabilities, and probate processes. Staying informed about these updates is crucial for individuals and families to ensure their estate plans remain efficient and tax effective.
Inheritance Tax (IHT) Reforms
- Pensions Included in IHT (Effective April 2027)
From April 2027, any unused pension funds will be considered part of an individual’s estate for inheritance tax purposes. Previously exempt, pensions will now contribute to the overall value of an estate, potentially increasing IHT liabilities. Those with significant pension savings should review their financial plans and seek expert advice to mitigate the impact of this change.
- Changes to Agricultural and Business Property Reliefs (Effective April 2026)
Starting in April 2026, agricultural and business property reliefs will be adjusted. Estates will still receive 100% relief on the first £1 million of combined agricultural and business property, but anything above this threshold will only qualify for 50% relief. This means that excess amounts will be subject to a 20% tax. Farmers and business owners should reassess their estate strategies to account for these changes.
- Freezing of IHT Thresholds (Until April 2030)
The nil-rate band (£325,000) and the residence nil-rate band (£175,000) will remain unchanged until April 2030. As property prices continue to rise, more estates may become liable for inheritance tax. Individuals should regularly review their estate plans to determine whether they may need to take additional steps to reduce tax exposure.
Modernising the Probate Process
- Online Probate Applications for Professionals
Since November 2020, all applications for a grant of probate involving a Will must be submitted online through the My HMCTS service. This shift is designed to streamline the probate process, reduce delays, and improve efficiency. Professionals handling probate must familiarise themselves with the online system to ensure smoother estate administration.
- Ongoing Reforms and Consultations on Wills
The Law Commission is working on modernising Will laws. Proposed reforms include allowing electronic Wills and removing the rule that marriage or civil partnership automatically revokes a Will. A draft Wills Bill is expected by 2025, potentially bringing substantial changes to how Wills are created and executed.
Intestacy Rule Updates
- Increase in Spouse’s Statutory Legacy
For deaths occurring on or after 26 July 2023, the statutory legacy for a surviving spouse or civil partner in cases of intestacy has increased from £270,000 to £322,000. The remainder of the estate is divided equally between the spouse and any children. If there are no children, the entire estate passes to the spouse or civil partner. This change reinforces the importance of having a legally valid Will, as intestacy rules may not reflect an individual’s true wishes.
Why Regular Estate Planning Matters
With frequent changes in probate and inheritance laws, it is essential to review estate plans regularly. Whether it involves tax-efficient planning, updating a Will, or ensuring compliance with probate requirements, staying informed can help individuals protect their assets and ensure their wishes are respected.
Contact Audley Chaucer
If you need expert guidance on Wills, probate, or inheritance tax planning, our experienced team is here to help. Contact Audley Chaucer to ensure your estate is managed efficiently and in line with the latest legal updates.
For further information on this topic or on any other legal area, please contact John Szepietowski or Kay Stewart at Audley Chaucer Solicitors on 01372 303444 or email admin@audleychaucer.com or visit our Linkedin page.
Gaina Kapoor
This information was correct as of March 2025.