With Chancellor Rachel Reeves set to deliver her first full Autumn Statement on 26 November 2025, speculation is building that IHT reform is on the cards. Whether that means a rate cut, a policy tweak, or a complete overhaul, no one knows for sure. But at GSI, we believe now is a time not to fear, but to prepare.
The IHT System Today – Still in Place
Despite ongoing debate, the current UK IHT system remains unchanged as of 28 October 2025:
- Nil-Rate Band (NRB): £325,000 per person
- Residence Nil-Rate Band (RNRB): Up to £175,000 extra when passing the family home to direct descendants
- Combined for couples: Up to £1 million
- Rate above threshold: 40% on the taxable estate
In simple terms, a £1 million estate for a single person with no RNRB eligibility could face a £270,000 IHT bill.
What Might Be Changing?
Nothing has been announced yet. But here’s what the press, think tanks, and political analysts believe could appear in the Autumn Statement—or in future reform:
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Lowering the IHT Rate
A cut from 40% to 30% or 20% is being considered to reduce the “punishment perception” of the tax.
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Raising the Nil-Rate Band
The £325,000 threshold hasn’t moved since 2009. With inflation and house prices rising, this is long overdue—and a popular political move.
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Full Abolition
Still whispered about in some circles, but very unlikely under Labour. The party has previously defended IHT as a “tax on the very wealthy”.
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Broader Reform
This is the most likely scenario:
- Gifting rules could tighten
- Business Relief may be pared back
- Trust structures may be scrutinised
- A banded system, like income tax, could emerge
These changes would allow the government to say it’s “simplifying” IHT while also maintaining—or increasing—revenue.
Watch This Space: Could Pensions Be Pulled Into IHT?
This is one rumour we’re watching closely.
At present, defined contribution pensions (e.g. SIPPs) are not counted as part of your estate for inheritance tax purposes. If you die before age 75, they can usually be passed on tax-free. After 75, beneficiaries pay income tax at their marginal rate—but not IHT.
However, in policy circles, there is growing discussion that this could change.
Several think tanks, including the IFS and Resolution Foundation, have suggested that pensions should be treated more like other assets for tax purposes—especially where large pots are being used as inheritance vehicles rather than for retirement income.
GSI’s view:
There is no confirmed policy, but if you are relying on pensions as a key part of your legacy plan, now is the time to:
- Review your beneficiary nominations
- Check how your pensions are structured and accessed
- Speak to your adviser about how this might affect your estate
Smart Planning Steps to Take Now
Regardless of political speculation, there are several planning tools that make sense in almost all scenarios:
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Use Your Annual Exemptions
- £3,000 annual gifting allowance
- £250 small gifts exemption
- Gifts out of surplus income (if they don’t reduce your standard of living)
These are tax-free and cumulative.
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Make a Will
Still one of the simplest, most effective ways to ensure your wishes are respected—and your estate avoids unnecessary delays.
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Review or Establish Trusts
Trusts remain useful for protecting vulnerable beneficiaries or managing complex legacies. But they’re likely to come under increased scrutiny in future budgets—so get advice now.
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Review Your Pensions
Even with no confirmed rule change, pensions remain:
- Outside the estate for IHT
- A valuable intergenerational planning tool
- Flexible and tax-efficient—with careful use
But their tax treatment may shift. Now is the time to ensure they are aligned with your goals.
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Involve Your Family
Early conversations reduce future confusion. Consider a family planning meeting with your adviser, especially if your estate includes property, business assets, or inherited wealth.
What Not to Do
- Don’t panic. Reacting too quickly to unconfirmed rumours can lead to poor decisions.
- Don’t delay reviews. If changes are announced, the window to act could be short.
- Don’t assume you’re unaffected. More estates are now caught by IHT thresholds than ever before, due to years of asset inflation and frozen tax bands.
How GSI Helps
At GSI, inheritance planning is never just about avoiding tax. It’s about helping clients give with confidence—whether that means supporting family, passing on business assets, or building a lasting legacy.
We work with clients to:
- Model IHT exposure under current and potential future rules
- Use pensions, trusts, and allowances effectively
- Collaborate with solicitors and accountants to ensure full alignment
- Provide ongoing reviews, especially during periods of political change
Final Word
We don’t yet know what 26 November will bring. But we do know this:
- The IHT system may change.
- Good planning doesn’t depend on perfect timing—it depends on clarity, structure, and communication.
- GSI is here to support you—before, during, and after any reform.
If you have questions about your current plan, or simply want to explore options, speak to your GSI adviser.
Disclaimer
The content of the GSI Journal is for information only and does not constitute personalised financial advice. All tax rules are subject to change. Please speak to a regulated financial adviser before making any financial decisions based on your individual circumstances.
