Inheritance Tax (IHT) can feel like a tricky or awkward topic, but a little planning now can save stress (and money) later. With new rules coming into force from April 2027, pensions and other assets that used to escape IHT may now come under the tax net. It’s a good moment to start the conversation. When you and your parents talk about this together, you’re not just sorting finances, you’re showing care, trust, and foresight.
1. Start with Understanding (Not Pressure)
Every family’s financial story is different. Begin by asking what your parents understand already, what they’ve heard, and what they worry about. The goal isn’t to lecture, but to listen and learn. You might uncover assumptions or misunderstandings you can resolve together.
2. Explain What’s Changing
Pensions into IHT
From 6 April 2027, most unused pension funds and death benefits will be included in someone’s estate for IHT purposes.
Who pays / reports
New rules propose that personal representatives (those handling the estate) will need to report and pay IHT on pension elements.
Reliefs on farms / businesses
From April 2026, the unlimited reliefs for agricultural or business property will be capped: the first £1 million gets 100% relief, above that only 50% relief.
What’s not certain yet
Legislation is still being finalised, so some details may shift.
You don’t need to cover every detail, just enough to make the shift feel real and give a frame for discussion.
3. Talk Openly About Their Wishes
Go beyond just “how much tax might we pay?” and ask questions like:
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What do you intend your legacy to look like?
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Are there people or causes you want to prioritise?
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Are there assets (e.g. pension, property, business) you’re particularly concerned about?
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How much do you want decisions now, vs leaving flexibility?
These questions help you understand values (not just numbers).
4. Explore What You Can Do Together Now
It’s not about panicking, it’s about options. Some possible steps:
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Consider drawing down pensions earlier (if cashflow allows), so that less is left unused later.
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Gifting while alive (within existing rules) may help reduce the estate.
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Review wills, trusts, beneficiary nominations to ensure they reflect updated goals.
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Seek professional advice – a financial planner or tax adviser can run “what-if” scenarios.
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Talk about what happens if health or capacity changes, so decisions aren’t left entirely for the executor.
5. Watch the Tone (It’s a Sensitive Topic)
Money and inheritance can bring up emotions – worry, guilt, loss, regret.
Keep your tone:
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Respectful – this is their life’s work and legacy
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Gentle – don’t rush, force, or freak out
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Collaborative – use words like “we”, “together”, “chat about”
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Hopeful – frame it as protecting what matters, not punishing with tax
6. Agree Next Steps (and Timing)
To avoid the conversation ending in ambiguity, try to agree on:
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A follow-up chat (e.g. in a month)
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What you’ll each do before then (e.g. gathering statements, meeting an adviser)
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A rough schedule (e.g. “in the next year we’ll review all assets and map them to current IHT rules”)
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Ending with shared action helps make it less theoretical and more real.
Building Confident Financial Futures
Talking about inheritance tax doesn’t have to be uncomfortable; it can be a way to care for each other and plan wisely. At Planit Financial, we’re here to support families having these conversations, helping you all feel confident and informed about what comes next.
