Britons are still reluctant to have vital conversations about inheritance with loved ones, with one in four over-55s admitting they have never discussed it with their family.
The need to talk is becoming even more urgent as Chancellor Rachel Reeves plans to make unused defined contribution pension pots and pension death benefits liable to inheritance tax (IHT) from April 6, 2027.
That might only be the start. Andy Burnham has previously called for a new tax raid on inheritances and is also being pressed to scrap the capital gains tax “uplift”, which wipes out any CGT liability on death.
If Burnham gains power, families could pay both IHT and CGT on the same money. As a result, more families may need to rethink their plans.
Yet many are reluctant to even broach the subject, new research from wealth manager Mattioli Woods reveals.
Inheritance remains an uncomfortable subject for many families. Some see money as private, while others feel it is too early to discuss the sensitive topic.
But Amit Joshi, managing director of wealth at Mattioli Woods, said delaying the conversation can leave families scrambling when important decisions need to be made. “The reluctance to talk about inheritance is understandable, but it can leave families unprepared at a time when clarity matters most.”
Key decisions are often left until moments of stress or urgency, when it is harder to reflect clearly or act in a coordinated way, he added: “That can create uncertainty around intentions, increase the risk of disputes, and lead to avoidable delays in administering estates.”
Many will lose out because they don’t understand the rules. Only around a third of over-55s know pensions may soon attract IHT while just one in six understand key allowances such as the £325,000 nil-rate band and £175,000 residence nil-rate band.
However, six in 10 do know about the longstanding seven-year gifting rule, where gifts fall outside of IHT if you live long enough after making them.
New research from RBC Brewin Dolphin shows that better-off households are already taking action ahead of next year’s pensions IHT raid changes.
Many are gifting larger sums earlier, and to a wider group of beneficiaries.
RBC Brewin Dolphin director Michelle Holgate said the changes mean more will get caught in the IHT net for the first time, and maybe without realising it. “Gifting while you are alive can help but it’s important to understand the rules and have the right advice.”