Ricky Butler, Head of New Business and Growth at LifeSearch, explores how advisers can navigate the UK’s largest intergenerational wealth transfer while addressing growing inheritance tax exposure.
We are on the cusp of the largest intergenerational wealth transfer the UK has ever seen. Over the next 30 years, Baby Boomers are expected to pass on around £7 trillion to younger generations – but for many families, that transfer won’t be straightforward and will come with an inheritance tax (IHT) bill.
HMRC receipts are climbing fast. £7.7bn was collected between April 2025 and February 2026 alone, putting this year on track for yet another record – with longer term projections suggesting that figure could approach £14.5bn in 2030-31. More wealth is moving between generations, and more of it is being taxed. Which brings advisers back to a very practical question: how will customers best navigate this?
Mitigation alone doesn’t solve the problem
The traditional approach to IHT planning has centred on mitigation – gifting strategies, trusts and available reliefs. These remain important tools and can significantly reduce the overall exposure. But even well-structured planning rarely removes the liability altogether – more often, it reshapes it.
A residual liability frequently remains, and when it arises, it does so with little flexibility. IHT is typically payable before probate is granted, creating a disconnect between where wealth sits and when it can be accessed. Estates may hold substantial value, but it is often tied up in property, pensions or longer-term investments.
Families can find themselves facing a tax bill before they have the means to settle it, placing pressure on decisions at what is already a difficult time.
This is not simply a tax issue. It is a liquidity issue, and one that mitigation strategies alone cannot fully resolve.
Protection as a planning tool, not a backstop
Traditionally, protection has been positioned as a safeguard against the unexpected – kept in a drawer in case circumstances change. In the context of IHT, the dynamic is quite different. For many customers, the liability is not hypothetical. Based on current asset values and frozen thresholds, it is increasingly predictable.
A whole-of-life policy, structured appropriately, offers a guaranteed payout designed to meet an anticipated IHT bill. Rather than relying on the timely sale of assets or funds tied up within the estate, it creates a clear and immediate source of liquidity at precisely the point it is needed – turning what would otherwise depend on timing, market conditions or administrative delays into a defined and controlled outcome.
The planning environment is shifting and urgency is growing
IHT thresholds remain frozen until at least 2030, while asset values – particularly property – have continued to rise. The inclusion of pensions within the taxable estate from April 2027 represents a fundamental shift in how wealth can be passed between generations. For many customers, pensions have long been one of the most effective ways of managing IHT exposure. Bringing them into scope increases overall liability but also removes a key planning lever that advisers have historically relied upon.
Meanwhile, reliefs such as business and agricultural property relief face growing scrutiny, with ongoing discussion around potential caps and restrictions.
Protection’s flexibility makes it well-suited to this shifting landscape. Whole of life policies remain the natural fit where there is a known and ongoing exposure. More targeted solutions can cover specific risks, such as the seven-year period associated with lifetime gifts, while term assurance may be appropriate where liabilities are expected to reduce over time.
Writing plans under trust ensures proceeds sit outside the estate – reaching the right people at the right time, without delay. That speed of access is not simply a technical benefit; it is central to the effectiveness of the solution.
Placing protection at the centre
As inheritance tax becomes more prominent and more predictable, protection is no longer an optional addition to estate planning. It is the mechanism that helps ensure those plans work when they are put to the test. This is complex territory, and specialist, expert advice is crucial.
The challenge for advisers is no longer just about reducing the liability. It is about making sure there is a clear, reliable and timely way of meeting it. Increasingly, that means placing protection at the centre of the conversation, not at the edges.
