A significant portion of Britons remain hesitant to discuss inheritance matters with family members despite impending tax changes that could affect estate planning. According to recent research, one in four individuals aged over 55 have never initiated conversations about inheritance with their relatives, a reluctance that experts warn could lead to difficulties as new tax rules come into effect.

The upcoming changes, set to begin on April 6, 2027, involve the inclusion of unused defined contribution pension pots and pension death benefits within the scope of inheritance tax (IHT). Chancellor Rachel Reeves has announced these measures as part of a broader effort to adjust the taxation framework on wealth transfers. Further proposals from Labour politician Andy Burnham suggest possible additional inheritance-related tax reforms, including the removal of the capital gains tax (CGT) uplift on death, which currently exempts asset value increases from taxation upon death. Should these proposals advance, families might face liability for both IHT and CGT on the same assets, complicating financial planning for many.

Despite the potential financial impact, many families continue to avoid discussing inheritance. A survey conducted by wealth manager Mattioli Woods highlights that inheritance remains a sensitive issue, with some viewing discussions about money as intrusive or premature. Amit Joshi, managing director of wealth at Mattioli Woods, emphasized that postponing such conversations can leave relatives unprepared during critical moments. Joshi noted that delays in communication often result in uncertainty regarding a deceased person’s intentions, potentially increasing disputes and causing avoidable delays in estate administration.

Public understanding of the changing tax landscape also appears limited. The research found that only about one-third of those over 55 are aware of the forthcoming inclusion of pensions in inheritance tax, while merely one in six understand key allowances such as the £325,000 nil-rate band and the additional £175,000 residence nil-rate band. However, awareness is greater for the existing seven-year gifting rule, with 60% recognizing that gifts made in advance of death can be exempt from IHT if the giver survives for seven years.

Data from RBC Brewin Dolphin indicates that wealthier households are proactively adjusting their estate plans in anticipation of the tax changes. Many are transferring larger sums of money earlier and broadening the circle of beneficiaries. Michelle Holgate, a director at RBC Brewin Dolphin, stressed the importance of understanding the complex rules governing these changes and seeking appropriate professional advice. “Gifting while you are alive can help, but it’s important to understand the rules and have the right advice,” Holgate stated.

As the April 2027 deadline draws nearer, financial experts urge families to engage in open discussions and review their estate plans to navigate the evolving tax environment effectively.