Financial planners at Rathbones have seen a sharp rise in client queries and early action ahead of plans to bring unused pension savings into inheritance tax (IHT) calculations from April next year.
HMRC estimates that around 10,500 estates will face an inheritance tax bill for the first time as a result of the change, with a further 38,500 expected to pay more tax. However, these are static estimates and do not account for shifting behaviour, such as earlier drawdown or increased gifting.
Rathbones says those behavioural changes are already taking hold. Its financial planners report pensions being used more actively to generate income — often to support gifting to children and grandchildren — and a broader rethink of long-standing approaches to pensions and legacy planning.
New research* from Rathbones also found that more than two thirds (67%) of 1,010 parents and grandparents funding private school or university costs surveyed say the change is motivating them to provide support during their lifetime, with over a third (35%) saying it has had a strong influence on their thinking.
Rathbones has gathered insights from financial planners across some of its UK regional offices.
Bournemouth: growing interest in alternative planning routes
Amanda Cook, Financial Planning Director based in Rathbones’ Bournemouth office, says: “We’re seeing growing interest in alternative planning routes as clients reassess how best to pass on wealth in light of the 2027 changes. In particular, there’s increased use of structures such as family investment companies and charitable giving, as clients look to balance tax efficiency with supporting family in a considered and sustainable way.
“At the same time, this is feeding into a wider shift towards simplifying financial arrangements. Many clients are consolidating pensions, selling buy-to-let properties or moving away from more complex structures, while also making greater use of pension income to fund gifting under surplus income rules. Overall, the trend is towards more flexible, forward-looking planning and making decisions earlier, rather than relying on previous assumptions.”
Birmingham: rethink of pensions’ role
Ross Coombes, Senior Financial Planning Director and Head of Rathbones’ Birmingham office, says: “For many years, pensions have increasingly been viewed as a way to pass on wealth, as well as fund retirement. What we’re seeing now is a clear shift back towards pensions being used more actively to provide income, with other assets supporting lifetime gifting.
“As a result, more clients are choosing to help children and grandchildren now – whether that’s supporting housing, education or other financial needs – rather than waiting for assets to pass on death. For many, the ability to see the impact of that support during their lifetime is a key motivation, alongside the tax considerations.
“There’s also increased interest in using pension income more strategically — for example, to fund regular gifting or support arrangements such as life cover written in trust. The overall trend is towards more deliberate, proactive planning.”
Scotland: surge in client queries and reviews
Alanah Mitchell, Financial Planner based in Rathbones’ Glasgow office, says: “We’re seeing a significant increase in clients revisiting their estate planning, particularly where pensions form a large part of their wealth. Even where an inheritance tax liability may not arise, the changes are creating uncertainty and prompting a reassessment of long‑standing plans.
“In practice, this is leading to more discussions around using pensions more actively — from drawing tax‑free cash to support gifting, to using surplus income rules to pass money on without the need to survive the seven‑year period. We’re also reassessing income strategies more broadly, with some clients now considering accessing pensions earlier than previously planned.
“More widely, this is feeding into a broader review of estate planning, including gifting, trust arrangements and other inheritance tax solutions, as clients take a more proactive and joined‑up approach.”
London: clients moving from discussion to action
Ryan Jackson, Chartered Financial Planner based in Rathbones’ London office, says: “We’re already seeing clients take practical steps in response to the upcoming changes. In some cases, clients are taking regular lump sums from their pensions and gifting that money under the gifts out of surplus income rules as part of a structured approach to passing wealth to the next generation.
“There’s also greater focus on how gifts are used. For example, where funds are contributed into a beneficiary’s pension, this can improve long-term tax efficiency across generations. Alongside this, many clients are reviewing their beneficiary nominations to ensure pensions are aligned with their wider estate plans.”
