A Manchester-based financial planning consultancy says it has experienced a sharp increase in enquiries from legal firms as concerns grow over major inheritance tax changes to pensions due to take effect in April 2027.
Andrew Day, founder and CEO of Depledge Strategic Wealth Management, said his firm has seen a sixfold increase in approaches from law firms in the first four months of 2026 compared with previous years, as professionals assess the potential impact of changes that will bring unused pension pots into the scope of inheritance tax. Day points out that the reforms could result in significantly higher tax liabilities for some families, with effective tax rates on inherited pension wealth potentially reaching as high as 81% in certain scenarios.
Day said: “From April 2027, unspent pension funds will fall within the scope of inheritance tax for the first time,” said Day, who leads a 17-strong team of CISI (Chartered Institute for Securities & Investment)-accredited financial planning experts with £315m of assets under advice.
“This is a seismic change that many people are currently unaware of. Those who are, including lawyers looking to safeguard their clients’ assets across generations, are waking up to this issue and contacting us.
“In the first four months of a typical calendar year, we would expect some contact with law firms, however, this year we are meeting with six new firms. I was sat in a meeting with a potential client introduced from one law firm the other day when my phone rang and it was another law firm wanting to introduce another client to see if we could help them too.
“Word is getting out on this, and not without good reason. For example, from April 2027, a married couple with children holding a £1 million pension alongside £2 million in other assets could face an inheritance tax liability increasing from £400,000 to £940,000 plus income tax charges on the pension depending on the age the individual passes away.
“If the estate is £2 million and the pension is £1 million, the combination of taxes could be very disturbing. A jump from 0% to 81% can be financially ruinous if it comes unexpectedly.”
Effective planning options do exist, but they require timely professional advice. Key strategies include making use of spouse exemptions, reviewing legal status through marriage or civil partnerships, implementing structured gifting programmes, redirecting surplus funds into beneficiaries’ pension arrangements to reduce taxable estates, buying exempt assets and insuring lives.
Day added: “We have one client who managed to reduce his immediate tax exposure ahead of next April’s law change simply by getting a civil partnership to his long-term partner.”
| Example case of IHT hike exposure risks | |
| £1,000,000 pension fund now subject to IHT | £400,000 inheritance tax |
| As the total estate would now be over £2.7m the residence nil rate band would be lost | Up to £140,000 inheritance tax as a combined residence nil rate band on the family home would be lost. |
| If the beneficiary is a 45% taxpayer and needs to draw out the fund inherited from someone over age 75 | £270,000 income tax |
| In this worst-case scenario the combined taxes could very significant. | £810,000 in total additional taxes |
