Financial advisers are bracing for a surge in demand for inheritance tax planning (IHT) as new rules take effect. Transact’s latest adviser survey reveals a marked shift towards trusts, gifting, and investment bonds, as clients seek specialist support to navigate the inclusion of pension wealth in estate valuations from 2027.
The majority of financial advisers (59%) say recent inheritance tax (IHT) changes will increase demand for advice, as clients seek more specialist support in response to the forthcoming inclusion of pension wealth in estate valuations from April 2027.
In a survey of 260 advisers conducted by Transact, respondents reported a clear shift in client priorities towards estate and intergenerational planning1. Advisers highlighted three core strategies expected to play a central role in client plans over the coming years:
- Trust-based planning (54%)
- Gifting out of surplus income (47%)
- Investment bonds (44%)
These approaches are increasingly favoured for their effectiveness in managing wealth transfer and mitigating tax liabilities. Trust-based planning offers control and protection, gifting out of surplus income enables tax-efficient lifetime transfers, and investment bonds provide flexible, long-term planning options.
Advisers also anticipate increased use of lifetime gifting, including exempt transfers, potentially exempt transfers (PETs), and chargeable lifetime transfers (CLTs). For many, it may become more tax-efficient to withdraw and gift pension funds during retirement, despite the income tax implications.
IHT exposure set to triple
The adviser survey follows the publication of the latest Transact Inheritance Tax Index, which uses data from the Office for National Statistics’ Wealth and Assets Survey2. The Index shows that, as a result of the 2027 reforms, the number of UK households potentially liable for IHT is projected to more than triple — from 1.6 million to 5.1 million — reversing the downward trend that followed the introduction of the Residence Nil Rate Band in 2017.
Transact’s Andrew Cullen Jones, Chief Development Officer, said:
“The inclusion of pension wealth for inheritance tax purposes will fundamentally alter the financial planning landscape for families who previously fell below the threshold. We are already seeing advisers respond with more proactive and sophisticated strategies, from the use of trusts and gifting plans to reassessing pension withdrawal approaches. These reforms will make tailored financial advice more valuable than ever, ensuring clients can manage their exposure and pass on wealth efficiently”.
Transact is well placed to support advisers revisiting their clients plans with the full breadth of wrappers available on the platform – including both onshore & offshore bonds – as well as a full suite of trusts, all accompanied by a first-class technical support team who are there to help advisers navigate the complexity of the legislative changes and to put solutions in place for their clients.
