Why talking about inheritance matters more than ever

Do you know how upcoming changes to pensions and inheritance tax will affect you?

Published: July 11, 2026 at 9:00 AM

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Millions of families could face bigger inheritance tax (IHT) bills in the years ahead, yet many of us avoid having conversations that could help us leave more of our wealth to our loved ones.

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The Office for Budget Responsibility said this month that it expects inheritance tax receipts to continue rising over the coming decades, driven largely by an ageing population and growing levels of household wealth. The number of people aged 80 and over is projected to more than double by 2075, while assets such as property and investments are likely to mean more wealth is passed between generations.

However, new research suggests inheritance remains one of Britain's biggest financial taboos, with one in four over-55s saying they have never discussed it with their family, despite expecting to leave money or assets to them when they die. Many say it's simply too uncomfortable to talk about, while others believe there's no need to have the conversation yet.

A survey by financial planners Mattioli Woods found that only 15% say they understand key tax-free allowances, and only around a third know that – from April 2027 – most unused pension pots will also be brought into the scope of inheritance tax for the first time.

Amit Joshi, managing director of wealth at Mattioli Woods, said: “The reluctance to talk about inheritance is understandable, but it can leave families unprepared at a time when clarity matters most. When these conversations are delayed, important financial and emotional decisions are often left until moments of stress or urgency, when it is harder to reflect clearly or act in a coordinated way. “

Ways to reduce inheritance tax bills

Talking about inheritance is not just about deciding who gets what; it can also help families understand the potential impact of inheritance tax for those who are likely to leave sizeable assets.

One of the easiest ways to reduce any inheritance tax bill is to pass on some of your assets during your lifetime. As well as helping to reduce the value of your estate, this allows you to see your loved ones benefit from your support while you're still around to enjoy it.

FREE guide Property -v- Pension from Hargreaves Lansdown

Gifts typically become free from inheritance tax provided you live for seven years after making them. There are also various gifting allowances that can help you pass on money tax-efficiently. For example, you can usually give away up to £3,000 each tax year without it being counted as part of your estate for inheritance tax purposes. You can also give as many gifts of up to £250 as you like, provided you have not used another exemption for that same person.

Another option is giving money from your regular income. These gifts may be exempt from inheritance tax if they are part of your normal spending, come from income rather than savings or investments, and do not affect your ability to cover your own living costs. This could include helping family members with everyday expenses, such as contributing towards rent, education costs or providing regular financial support.

Are you ready for pension inheritance tax changes?

The lack of awareness surrounding inheritance tax extends to changes that have yet to come into effect. A third of people (32%) have no idea how upcoming changes to pensions and inheritance tax will affect them, separate analysis by Hargreaves Lansdown found. From April 2027, unused defined contribution pensions will be counted as part of your estate for inheritance tax purposes, dragging even more estates into the IHT net.

Angela Davis, a chartered financial planner at Hymans Robertson Personal Wealth said: “For many, pensions have quietly become one of the most valuable assets they hold. If the proposed changes bring pots into scope for IHT, far more people will find their estates exposed to a tax that they hadn’t anticipated. The biggest risk to managing this change isn’t complexity, it’s inertia. It’s important that people start to review how their pensions fit into their wider family and financial plans sooner rather than later.

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FREE guide Property -v- Pension from Hargreaves Lansdown

“Planning earlier can allow people to approach decisions in a more measured and considered way, rather than reacting impulsively to change later on. It creates space to weigh up different priorities, such as maintaining financial security, supporting family, and understanding how tax might apply over time.”

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