The pension inheritance tax changes were front of mind for many advisers in Platforum’s recent roundtable discussions. Advisers are grappling with the most significant changes to their tax planning strategies since pension freedoms. As one adviser succinctly put it, the proposed new rules “have taken most of the tools out of our toolbox.”
But advisers are already developing strategies to deal with the new position due to come into effect on 6 April 2027. They expect more clients to take tax-free cash as a lump sum and make greater use of outright gifts, gifts into trusts and remaining business relief opportunities. Whole-of-life policies and group life assurance for business owners are also part of the mix.
Most advisers don’t see much of a role for lifetime annuities for clients with IHT issues. The only takers, in their view, will be risk-averse clients boosting their retirement income up to the basic or higher rate tax bands.
Tax changes present valuable new opportunities for advisers and many have already seen an uptick in new business. Some clients are re-engaging with their finances, but many are unsettled and in need of coaching and reassurance. Advisers see their main job as keeping clients focused on what should matter most: ensuring they have enough money to keep up the lifestyle they want in retirement.
We explore these trends in our upcoming report, UK Financial Advisers: Planning Technology. For more information, please get in touch.