Inheritance Tax Changes April 2026: Why Life Insurance Matters More Than Ever

inheritance tax changes April 2026 — What Is Changing With Inheritance Tax in April 2026

April 2026 marks one of the most significant shifts in inheritance tax (IHT) policy in a generation. While the headline nil-rate band remains frozen at £325,000 — where it has sat since 2009 — a raft of targeted reforms will drag thousands more families into the IHT net and increase the bills faced by those already exposed. Read on for our complete Inheritance Tax Changes April 2026 breakdown.

The changes affect agricultural landowners, business owners, investors holding AIM-listed shares, and anyone whose estate sits above the combined threshold of £1 million for couples. If you have been relying on reliefs that previously sheltered your assets from the 40% IHT charge, the landscape is about to look very different.

Here is a summary of the key inheritance tax changes taking effect from April 2026:

• Agricultural Property Relief (APR) and Business Property Relief (BPR) will be subject to a new combined cap of £2.5 million per person, or £5 million for married couples and civil partners.
• Assets exceeding the £2.5 million cap will receive only 50% relief, resulting in an effective IHT rate of 20% on the excess rather than full exemption.
• AIM-listed shares lose their existing 100% relief entirely and will now receive a flat 50% relief, creating an effective 20% IHT liability on their full value.
• Business Asset Disposal Relief sees its Capital Gains Tax (CGT) rate rise to 18%, up from 14%.
• Dividend tax rates increase by 2 percentage points across the board — the basic rate moves from 8.75% to 10.75%, while the higher rate climbs from 33.75% to 35.75%.
• The nil-rate band remains frozen at £325,000, with no scheduled increase until at least 2030.

Taken together, these reforms represent a deliberate tightening of reliefs that have historically allowed wealthier families to pass on farms, businesses, and investment portfolios with little or no IHT liability. For many, the question is no longer whether they will face an IHT bill, but how large it will be — and how they can plan to meet it without forcing a fire sale of family assets.

That is where life insurance enters the picture. A properly structured life insurance policy can provide the exact sum needed to settle an IHT bill on death, preserving the estate for beneficiaries. Before we explore that solution in detail, let us examine exactly what is changing and who stands to be affected most.

Agricultural and Business Property Relief: The New Cap Explained

For decades, Agricultural Property Relief and Business Property Relief have been two of the most powerful tools in the estate planner’s toolkit. APR allowed qualifying agricultural land and buildings to be passed on free of IHT, while BPR did the same for shares in unquoted trading companies, interests in partnerships, and certain other business assets. Both reliefs could provide 100% exemption from IHT, with no upper limit on value.

From April 2026, these two reliefs are being merged under a single combined cap of £2.5 million per individual. For married couples and civil partners, the cap effectively doubles to £5 million, since each partner has their own allowance.

How the New Cap Works in Practice

If the qualifying assets in your estate — farmland, business interests, or a combination of both — are worth £2.5 million or less, you will continue to receive 100% relief. Nothing changes for you in practical terms.

However, if your qualifying assets exceed £2.5 million, the portion above the cap will only receive 50% relief. Since IHT is charged at 40%, a 50% relief on the excess means that portion is taxed at an effective rate of 20%.

Consider a farmer whose agricultural land is valued at £4 million.

Under the old rules, the entire £4 million would have been exempt from IHT through APR. Under the new rules:

• The first £2.5 million continues to receive 100% relief — no IHT due.
• The remaining £1.5 million receives 50% relief, so £750,000 is sheltered and £750,000 is exposed to IHT.
• At 40%, the IHT bill on that £750,000 is £300,000.

That is £300,000 that would not have been payable under the previous system. For a farming family whose wealth is tied up in land rather than liquid cash, finding that sum within the six-month HMRC payment window can be extremely challenging.

Why This Matters for Family Farms and SMEs

The government has framed these changes as targeting the wealthiest estates, but agricultural land values have risen sharply over recent decades.

According to data published by HMRC, many working farms now comfortably exceed the £2.5 million threshold when land, buildings, and machinery are combined. The same is true for successful small and medium-sized enterprises whose value has grown over a lifetime of work.

The fundamental problem is one of liquidity. A farm worth £4 million does not have £300,000 sitting in a bank account.

Nor does a family engineering business valued at £3.5 million. Without advance planning, the only options may be to sell land, break up a business, or take on debt — none of which preserves the asset for the next generation.

AIM Shares and Investment Companies: What Changes

Investors who hold shares listed on the Alternative Investment Market (AIM) face a particularly stark change. Until now, AIM shares that qualified for BPR enjoyed 100% relief from IHT, making them a popular estate planning tool. Many financial advisers recommended AIM portfolios specifically as a way to reduce IHT exposure while maintaining access to a liquid, publicly traded investment.

From April 2026, that 100% relief disappears. AIM shares will instead receive a flat 50% relief, regardless of value.

This means the full value of an AIM portfolio will face an effective IHT rate of 20%.

The Impact on AIM Investors

An investor holding £500,000 in qualifying AIM shares would previously have paid no IHT on that portfolio. From April 2026, the calculation changes:

• £500,000 in AIM shares receives 50% relief, sheltering £250,000.
• The remaining £250,000 is subject to IHT at 40%, producing a bill of £100,000.

For larger AIM portfolios, the numbers become more significant. A £1 million AIM holding would generate an IHT liability of £200,000 — money that was previously entirely protected.

Wider Investment Tax Changes

The AIM changes do not exist in isolation.

The increase in Business Asset Disposal Relief CGT rates to 18% (from 14%) makes it more expensive to sell business assets during your lifetime, while the 2 percentage point rise in dividend tax rates reduces the net income from investments held in personal names. The basic rate of dividend tax moves to 10.75%, with the higher rate reaching 35.75%.

These combined changes mean that the tax-efficient wrapper around business and investment assets is being squeezed from multiple directions. Holding assets, disposing of assets, and passing on assets all become more expensive. This is precisely the environment in which robust insurance-based planning becomes essential.

Who Is Affected by These Changes

It would be a mistake to assume that these inheritance tax changes only affect the very wealthy. The frozen nil-rate band, rising property values, and the erosion of reliefs mean that a growing number of ordinary families are now caught in the IHT net.

Homeowners in High-Value Areas

The standard nil-rate band of £325,000, combined with the residence nil-rate band of £175,000, gives an individual a total IHT-free threshold of £500,000 — or £1 million for a couple passing on a family home to direct descendants. While £1 million sounds generous, average property values in London and the South East regularly exceed this figure when combined with pensions, savings, and other assets.

The residence nil-rate band is also subject to a taper for estates worth more than £2 million, reducing by £1 for every £2 above that threshold. This means larger estates can lose the residence nil-rate band entirely, dropping the effective couple’s threshold back to £650,000.

If you are already thinking about protecting your home and assets, it is worth considering your broader insurance picture too. Our guide to the best home insurance in the UK for 2026 can help ensure your property is properly covered while you plan for the longer term.

Farming Families

As outlined above, farms valued above £2.5 million now face IHT exposure for the first time in many cases. The National Farmers’ Union has warned that thousands of working farms could be affected, particularly in areas where land prices have risen sharply.

Business Owners and Entrepreneurs

Owners of unquoted trading companies, partnerships, and sole trader businesses valued above £2.5 million face the same cap on BPR. The combined effect of higher CGT on disposal and reduced IHT relief on death creates a tax pinch that is difficult to avoid through restructuring alone.

In addition, understanding inheritance tax changes April 2026 is essential for making the right financial decision.

AIM Investors and Portfolio Holders

Anyone who built an AIM portfolio partly or wholly for IHT planning purposes now faces a 20% effective IHT rate on those holdings. This affects not only high-net-worth individuals but also moderately wealthy retirees who were advised to shift assets into AIM shares as part of a broader estate plan.

State Pension Recipients Caught by the Tax Trap

While not directly an IHT issue, the interaction between the 4.8% state pension increase in April 2026 and the frozen personal allowance of £12,570 means more pensioners will be paying income tax on their state pension. This reduces the capacity to make lifetime gifts — one of the most effective ways to reduce an estate’s IHT exposure — and underlines the importance of having a comprehensive financial plan that accounts for both income tax and IHT.

How Much More IHT Could Your Family Pay: Worked Examples

Abstract policy changes become real when you see the numbers. Here are three worked examples illustrating the impact of the April 2026 reforms on different types of estates.

Example 1: A Farming Couple in the East Midlands

John and Margaret own a mixed arable and livestock farm valued at £3.8 million, plus a farmhouse worth £600,000 and savings of £150,000. Their total estate is £4.55 million.

Before April 2026:

• The £3.8 million farm qualifies for 100% APR — no IHT.
• The farmhouse and savings (£750,000) are covered by the couple’s combined nil-rate bands of £1 million.
• Total IHT bill: £0.

After April 2026:

• The first £5 million of farm value (combined couple’s allowance) still qualifies for 100% APR, so the farm itself remains fully covered.
• The farmhouse and savings (£750,000) are covered by their £1 million combined nil-rate bands.
• Total IHT bill: £0.

In this case, the couple’s combined £5 million APR cap is sufficient. But what if John were a widower?

John as a single owner (£4.55 million estate):

• Individual APR cap: £2.5 million at 100% relief.
• Remaining farm value: £1.3 million at 50% relief — £650,000 exposed to IHT.
• Farmhouse and savings (£750,000) minus nil-rate band (£500,000) = £250,000 exposed.
• Total taxable estate: £900,000.
• Total IHT bill: £360,000.

Example 2: A Business Owner in Manchester

Sarah runs a manufacturing company valued at £3.2 million.

She also owns her home (£450,000) and has savings and investments of £200,000. Her total estate is £3.85 million.

Before April 2026:

• The business qualifies for 100% BPR — no IHT.
• Home and savings (£650,000) covered by her £500,000 nil-rate band, leaving £150,000 taxable.
• Total IHT bill: £60,000.

After April 2026:

• First £2.5 million of business value receives 100% BPR.
• Remaining £700,000 receives 50% relief — £350,000 exposed to IHT.
• Home and savings (£650,000) minus nil-rate band (£500,000) = £150,000 exposed.
• Total taxable estate: £500,000.
• Total IHT bill: £200,000.

Sarah’s IHT bill more than trebles, from £60,000 to £200,000. That additional £140,000 will need to come from somewhere — and if her wealth is locked in the business, finding the cash could mean selling part of the company.

Example 3: A Retiree With an AIM Portfolio

David is a retired engineer with a home worth £380,000, a pension fund of £300,000, savings of £120,000, and an AIM portfolio of £600,000 that he specifically acquired for IHT planning. His total estate is £1.4 million.

Before April 2026:

• AIM shares qualify for 100% BPR — no IHT on the £600,000.
• Remaining estate (£800,000) minus nil-rate band (£500,000) = £300,000 taxable.
• Total IHT bill: £120,000.

After April 2026:

• AIM shares receive 50% relief — £300,000 sheltered, £300,000 exposed.
• Remaining estate (£800,000) minus nil-rate band (£500,000) = £300,000 exposed.
• Total taxable estate: £600,000.
• Total IHT bill: £240,000.

David’s IHT bill doubles. The AIM portfolio that was supposed to protect his family from IHT now generates a £120,000 liability of its own.

This is a pattern that will be repeated across thousands of portfolios built on pre-April 2026 assumptions.

How Life Insurance Can Cover an Inheritance Tax Bill

The examples above illustrate a common problem: IHT bills can be substantial, and the assets generating them are often illiquid. You cannot easily sell half a farm, carve up a trading company, or liquidate an AIM portfolio at short notice without potentially destroying value.

Life insurance offers an elegant solution. A policy can be taken out for the specific purpose of covering an anticipated IHT liability. On death, the policy pays out a lump sum that your beneficiaries can use to settle the tax bill with HMRC, allowing the underlying assets — the farm, the business, the family home — to pass intact to the next generation.

Why Life Insurance Works for IHT Planning

There are several reasons why life insurance is particularly well suited to IHT planning:

• Certainty of payout. A whole-of-life policy guarantees a payout whenever death occurs. There is no risk of the policy expiring before it is needed.
• Known sum assured. You can calculate your estimated IHT liability and take out a policy for that exact amount, ensuring your family has the funds to meet the bill.
• Immediate liquidity. Life insurance proceeds are typically paid within weeks of a claim, well within the six-month window HMRC allows for IHT payment on most assets.
• Affordability. Premiums for a whole-of-life policy are a fraction of the eventual payout, particularly if the policy is taken out at a younger age and in good health.
• Written in trust. When a life insurance policy is written in trust (more on this below), the payout falls outside the estate entirely, meaning it is not subject to IHT itself.

For families facing a new or increased IHT exposure as a result of the April 2026 changes, life insurance is one of the most practical and cost-effective responses available.

Calculating the Right Level of Cover

The amount of life insurance cover you need depends on your estimated IHT liability. This requires a thorough valuation of your estate, including property, investments, business interests, and any reliefs or exemptions that apply.

Using Sarah’s example from above, her post-April 2026 IHT bill is estimated at £200,000.

A whole-of-life policy with a sum assured of £200,000 would provide exactly the funds needed to settle this bill. If Sarah is 55 and in reasonable health, the monthly premiums for such a policy could be in the region of £150 to £250 per month — a manageable cost to guarantee that her business passes to her children intact.

It is worth noting that your IHT liability is not static. Property values, business valuations, and investment performance all fluctuate.

A good financial adviser will recommend reviewing your cover every few years to ensure it remains aligned with your estate’s current value. You can find regulated advisers through the Financial Conduct Authority’s adviser directory.

Whole of Life vs Term Life Insurance for IHT Planning

Not all life insurance policies are created equal, and choosing the right type is critical for effective IHT planning. The two main options are whole-of-life insurance and term life insurance.

Whole of Life Insurance

A whole-of-life policy pays out whenever you die, provided premiums are maintained.

There is no expiry date. This makes it the natural choice for IHT planning, since IHT is triggered by death and you cannot predict when that will occur.

Advantages for IHT planning:

• Guaranteed payout regardless of when death occurs.
• Can be set up with a fixed sum assured that matches your estimated IHT liability.
• Premiums can be fixed for life, providing certainty of cost.
• Can be written in trust to keep the payout outside your estate.

Disadvantages:

• Higher premiums than term insurance for the same sum assured.
• Some policies have reviewable premiums that can increase significantly at review points, typically every 10 years.
• If you outlive your health expectations, you may pay more in total premiums over your lifetime.

Term Life Insurance

A term policy pays out only if you die within a specified period — for example, 20 or 25 years. If you survive beyond the term, the policy expires and pays nothing.

Advantages:

• Significantly cheaper premiums than whole-of-life cover.
• Can be useful as a short-term measure while you implement other IHT planning strategies, such as making gifts that fall out of your estate after seven years.

Disadvantages for IHT planning:

• No guarantee of payout — if you die after the term expires, your family receives nothing.
• Renewing a term policy at an older age is far more expensive, and you may not qualify due to health changes.
• Does not provide the long-term certainty that IHT planning requires.

Which Should You Choose?

For most people planning specifically to cover an IHT liability, whole-of-life insurance is the appropriate choice. The certainty of a guaranteed payout is essential when the purpose of the policy is to meet a tax bill that will definitely arise on death.

Term insurance may have a role to play in specific circumstances — for instance, covering the seven-year period during which gifts remain potentially chargeable to IHT, or providing temporary cover while a more comprehensive estate plan is put in place. However, it should not be relied upon as the sole IHT planning tool.

Just as choosing the right life insurance matters for estate planning, selecting the right cover for your other assets is equally important. If you are reviewing your finances comprehensively, take a look at our guide on how to cut your car insurance premium and get the right cover — getting the best deal on everyday insurance frees up more of your budget for long-term planning.

Writing a Life Insurance Policy in Trust: Why It Matters

Taking out a life insurance policy to cover IHT is only half the equation. If the policy is not written in trust, the payout will form part of your estate on death — which means it will itself be subject to IHT. This would be self-defeating: the insurance proceeds designed to pay the tax bill would increase the tax bill.

What Is a Trust?

A trust is a legal arrangement in which assets are held by trustees on behalf of specified beneficiaries. When a life insurance policy is placed in trust, the policy is no longer owned by you — it is owned by the trust. On your death, the payout goes directly to the trustees, who distribute it to the beneficiaries according to the terms of the trust.

Because the policy is not part of your estate, the payout is not subject to IHT. Your beneficiaries receive the full sum assured, which they can then use to pay the IHT due on the rest of your estate.

How to Set Up a Trust for Your Life Insurance

Most life insurance providers offer trust forms as a standard part of the application process.

Setting up a trust at the point of taking out the policy is straightforward and usually costs nothing. The key steps are:

• Choose the type of trust. The most common options are a discretionary trust (which gives trustees flexibility over how and when to distribute funds) and a bare trust (which gives beneficiaries an absolute right to the funds). For IHT planning, a discretionary trust is often preferred as it offers greater flexibility.
• Appoint trustees. You will need at least two trustees. These can be family members, friends, or professional trustees such as solicitors. Choose people you trust to act in your beneficiaries’ interests.
• Name your beneficiaries. Specify who should benefit from the trust. This is typically your spouse, children, or other family members.
• Complete the trust form. Your insurance provider will supply the relevant paperwork. Ensure it is completed correctly, as errors can invalidate the trust arrangement.

Common Mistakes to Avoid

The most common mistake is simply forgetting to place the policy in trust. Many people take out life insurance with the best of intentions but fail to complete the trust paperwork, leaving the payout exposed to IHT. If you already have a life insurance policy that is not in trust, it may be possible to assign it to a trust retrospectively, although this can have tax implications and professional advice should be sought.

Another mistake is choosing inappropriate trustees or failing to keep trust documentation up to date. Trustees should be people who are likely to outlive you and who understand their responsibilities. The trust document should be reviewed periodically, particularly after major life events such as marriage, divorce, or the birth of grandchildren.

Further guidance on trusts and IHT planning is available on the GOV.UK inheritance tax page, which sets out the current thresholds, reliefs, and rules in detail.

Other Ways to Reduce Your Inheritance Tax Liability

Life insurance is a powerful tool for meeting an IHT bill, but it is not the only strategy available. A comprehensive estate plan will typically combine several approaches to minimise the amount of IHT payable. Here are the most effective options to consider alongside life insurance.

Make Use of Annual Gift Exemptions

Every individual can give away up to £3,000 per tax year free of IHT, known as the annual exemption. If you did not use the previous year’s exemption, you can carry it forward for one year, allowing a gift of up to £6,000. Gifts to individuals on marriage or civil partnership also benefit from specific exemptions: up to £5,000 from a parent, £2,500 from a grandparent, and £1,000 from anyone else.

Small gifts of up to £250 per person per year are also exempt, provided the recipient has not already benefited from your annual exemption.

Potentially Exempt Transfers (PETs)

Gifts that exceed the annual exemptions are known as potentially exempt transfers. If you survive for seven years after making a PET, it falls out of your estate entirely and is free of IHT. If you die within seven years, the gift is brought back into your estate, although taper relief reduces the IHT rate on a sliding scale from year three onwards.

This is one area where term life insurance can be useful: a seven-year decreasing term policy can be taken out to cover the potential IHT on a large gift, with the sum assured reducing over the seven years in line with the taper relief.

Leave Assets to Your Spouse or Civil Partner

Transfers between spouses and civil partners are completely exempt from IHT, regardless of value. This allows the surviving partner to inherit the entire estate tax-free. Furthermore, any unused nil-rate band from the first spouse to die can be transferred to the survivor, effectively doubling the available threshold.

Leave a Legacy to Charity

If you leave at least 10% of your net estate to charity, the IHT rate on the rest of your estate reduces from 40% to 36%. While this may not save money in absolute terms for smaller estates, it can be a meaningful reduction for larger ones and achieves a philanthropic purpose at the same time.

Consider Pension Planning

Pension funds are generally outside your estate for IHT purposes.

Depending on your circumstances, it may be more tax-efficient to draw income from other sources and leave your pension fund intact as long as possible. This is an area where professional advice is essential, particularly given the complexities introduced by the frozen personal allowance and the state pension tax trap.

Review Your Asset Structure

The April 2026 changes make it more important than ever to review how your assets are held. Joint ownership, the use of trusts, and the structuring of business interests can all affect the amount of IHT payable. A qualified financial adviser or solicitor can help you identify opportunities to restructure your affairs in a tax-efficient manner.

While you are reviewing your finances, it is worth checking that your day-to-day costs are optimised too. Rising premiums across insurance products can eat into the money available for long-term planning. Our analysis of why car insurance premiums are hitting £1,000 in 2026 offers practical advice on keeping those costs under control.

What to Do Next: A Step-by-Step Checklist

The inheritance tax changes taking effect in April 2026 are complex, but the steps you can take to protect your family are clear. Here is a practical checklist to guide your next moves.

Step 1: Value Your Estate

Start by calculating the current value of everything you own: property, savings, investments, business interests, personal possessions, and any assets held in trust.

Be thorough — HMRC will be. Include the value of any life insurance policies that are not written in trust, as these form part of your estate.

Step 2: Estimate Your IHT Liability

Subtract your available nil-rate bands (£325,000 standard, plus £175,000 residence nil-rate band if applicable) and any reliefs (APR, BPR, spouse exemption, charity exemption) from your estate value. Apply the 40% IHT rate to the remainder. If the April 2026 changes affect your reliefs, recalculate using the new rules — particularly the £2.5 million cap on APR and BPR, and the reduced relief on AIM shares.

Step 3: Review Existing Insurance Policies

Check whether you already have life insurance in place. If so, confirm the sum assured, the type of policy (whole of life or term), and crucially, whether it is written in trust.

If it is not in trust, take steps to rectify this as soon as possible.

Step 4: Take Out or Increase Life Insurance Cover

If your estimated IHT liability exceeds your current cover, consider taking out a new whole-of-life policy or increasing your existing cover. Ensure any new policy is written in trust from the outset.

Step 5: Start Making Gifts

Use your annual gift exemptions and consider making larger potentially exempt transfers if your income and capital allow. The sooner you start, the sooner the seven-year clock begins running.

Step 6: Review Your Will

Ensure your will reflects your current wishes and takes advantage of available reliefs and exemptions. A will that does not account for the April 2026 changes may result in an unnecessarily large IHT bill.

Step 7: Take Professional Advice

IHT planning is an area where professional advice can pay for itself many times over. A qualified financial adviser can help you navigate the new rules, calculate your exposure, and recommend the most appropriate combination of strategies for your circumstances. A solicitor can ensure your will and any trust arrangements are correctly drafted.

Step 8: Review Regularly

Your estate value, family circumstances, and the tax rules themselves will change over time. Build in a regular review — at least every two to three years — to ensure your plan remains fit for purpose.

Frequently Asked Questions

When do the new inheritance tax changes come into effect?

The changes to Agricultural Property Relief, Business Property Relief, and AIM share relief take effect from April 2026. The nil-rate band remains frozen at £325,000 until at least 2030.

Has the IHT rate itself changed?

No. The headline IHT rate remains at 40%.

What has changed is the extent of the reliefs available, which means more of your estate may be exposed to that 40% rate.

What is the combined nil-rate band for a married couple?

A married couple or civil partners can combine their nil-rate bands for a total threshold of £650,000 (2 x £325,000). If the residence nil-rate band also applies, this rises to £1 million (2 x £500,000). The unused portion of the first spouse’s nil-rate band can be transferred to the surviving spouse.

Do I need life insurance if my estate is below the nil-rate band?

If your estate is comfortably below the applicable nil-rate band and is likely to remain so, you may not need life insurance specifically for IHT purposes. However, life insurance can serve other important functions, such as providing for dependants or covering funeral costs. Remember that property prices and asset values can increase over time, so an estate that is below the threshold today may exceed it in the future.

Can I use life insurance to cover IHT on a property?

Yes. This is one of the most common uses of life insurance in IHT planning.

If you own a property that will push your estate above the nil-rate band, a whole-of-life policy written in trust can provide the funds your beneficiaries need to pay the IHT without having to sell the property.

What happens if I do not pay IHT on time?

IHT on most assets is due within six months of the end of the month in which the death occurred. If the tax is not paid by the due date, HMRC charges interest on the outstanding amount. For certain assets, such as property and land, it may be possible to pay IHT in annual instalments over 10 years, but interest still accrues on the unpaid balance.

Is it too late to plan if the changes are already in effect?

It is never too late to start planning. While earlier action gives you more options — particularly in relation to making gifts that need seven years to fall out of your estate — taking out life insurance, writing policies in trust, and reviewing your will can all be done at any time and will have an immediate positive impact on your family’s position.

Will the IHT nil-rate band increase in the future?

The government has confirmed that the nil-rate band will remain frozen at £325,000 until at least 2030. There has been no indication of any plans to increase it beyond that date.

In real terms, the freeze means the threshold is falling every year as inflation erodes its value, bringing more estates into the IHT net. You can check the latest IHT thresholds on the GOV.UK inheritance tax thresholds page.

Can I reduce IHT by giving my house to my children?

You can give your house to your children, but if you continue to live in it rent-free, it will be treated as a gift with reservation of benefit and will remain part of your estate for IHT purposes. To remove the property from your estate, you would need to either move out entirely or pay a full market rent. This is a complex area with significant tax implications, and professional advice is strongly recommended before taking any action.

Do pensions count towards my estate for IHT?

Most defined contribution pension funds are currently outside your estate for IHT purposes, making them one of the most tax-efficient assets to hold. However, the tax treatment of inherited pensions has become more complex in recent years, and the rules may continue to evolve. It is important to keep your pension death benefit nomination up to date and to review your overall position with a financial adviser.

How much does whole-of-life insurance cost?

The cost depends on your age, health, smoking status, and the sum assured. As a rough guide, a non-smoking 55-year-old in good health might expect to pay between £100 and £300 per month for a whole-of-life policy with a sum assured of £200,000 to £400,000.

Premiums are lower if you take out the policy at a younger age. Getting quotes from multiple providers is always advisable to ensure you secure the best rate.

Taking control of your estate planning now — before the full impact of the April 2026 changes is felt — is one of the most important financial steps you can take for your family. Life insurance, properly structured and written in trust, remains one of the most reliable ways to ensure that an inheritance tax bill does not force the sale of the assets you have spent a lifetime building. Speak to a qualified adviser, review your will, and put the right cover in place while the options are still available to you.