As 2025 draws to a close, the world of estate planning has been anything but quiet. We’ve had reform proposals, tax updates and legislative shifts — some already in force, others still crawling their way through consultation — all of which have real implications for clients and their families.
Below is my summary of the changes that matter most.
1. A Landmark Review: Reform of the Wills Act 1837
The Law Commission of England and Wales has undertaken a long-awaited modernisation of wills law. After almost two centuries, it’s probably due.
Key proposals include:
• Recognition of electronic wills (e-wills).
Wills could soon be created, signed and stored digitally under strict safeguards. (Cue distant cheering from tech firms — and possibly from a few sophisticated fraudsters.)
• The minimum age for making a will reduced to 16.
With more young adults holding substantial assets — and some already parents — this is very sensible.
• Marriage or civil partnership will no longer revoke an existing will.
This reflects modern life and prevents accidental intestacy. It also makes regular will reviews even more important, especially during or after divorce proceedings. This will cause more problems than it saves in my opinion, with the lack of thought given to wills by most clients who don’t understand the issues in detail.
• A clearer, modernised statute to replace the outdated patchwork of rules.
I’m slightly wary of attempts to align the mental capacity tests for Wills and LPAs — they serve different purposes, and I hope that distinction remains clear.
2. Pensions to Be Included in Inheritance Tax (IHT) from April 2027
This is one of the biggest — and most misunderstood — developments.
Historically, many vast pension pots fell outside the taxable estate. That favourable treatment is ending. In my opinion, this is a seriously bad move: what should be targeted is those using pensions deliberately as shelters against IHT, rather than as a way of saving for retirement.
The new rules mean that prudent pension savers will be penalised along with the tax avoiders.
From 6 April 2027:
- Most unused pension funds and death benefits from registered pension schemes may fall within the IHT estate.
- Executors will be responsible for reporting and paying any IHT due on pensions (confirmed July 2025).
- Death-in-service benefits remain exempt, thankfully.
Why this matters:
Clients can no longer assume pensions sit “outside” IHT. Large pension pots, combined with property and investments, could push many estates over the threshold.
For clients with substantial pensions, a review of wills, LPAs and estate planning strategy is no longer optional — it’s essential.
3. Agricultural & Business Property Relief (APR / BPR) Reform from April 2026
Historically, qualifying business or agricultural property often enjoyed 100% IHT relief. From April 2026, that generosity narrows.
- The first £1 million of qualifying assets still attracts 100% relief.
- Anything above this receives only 50% relief, leaving the remainder potentially exposed to IHT at an effective rate of around 20%.
- Couples may still be able to double this allowance with good planning.
Who’s affected?
Family business owners, farmers, and anyone with sizeable trading interests.
4. Frozen IHT Thresholds — A Quiet Change with BIG Consequences for Homeowners
It’s easily overlooked, but incredibly important: the basic and residence nil-rate bands remain frozen.
If the government sticks to its timetable, they will have been unchanged for over 30 years by the time new rules finally appear.
With property values rising and pensions soon to be added to estates, more families will drift into the IHT net — often unintentionally.
What This Means for You (and our Clients)
2025 has proved that estate planning can’t be a “once and done” exercise. Regular reviews are more important than ever.
• Wills need a fresh look.
Old wills may not reflect the new realities — especially around pensions and tax reliefs. Reviewing and, where appropriate, redrafting will prevent unexpected tax bills for beneficiaries.
• Estate planning must be holistic.
Looking only at property and savings is no longer enough. Pensions, business assets and investments often need to be considered together.
• Opportunities exist for lifetime tax planning.
Gifts, trusts, restructuring and other strategies may help reduce future IHT. Advice should be tailored carefully — and sensitively.
• Clear communication is essential.
Many clients simply won’t be aware of the risks. Helping them understand what’s changing — and what they can do — is a vital part of our role.
Looking Ahead to 2026
A few things to keep an eye on:
- Will the Law Commission’s recommendations finally become law? And what transitional rules will accompany them?
- How will pension inclusion impact probate in practice? Pension scheme administrators may need time to adjust, which could delay estate administration.
- Will further reforms be announced? Trusts, property tax and pensions are all ripe for political attention.
- How can we best protect clients from creeping IHT exposure? Trusts, lifetime gifts and structured planning will become even more important tools.
Take Action
If you’d like help reviewing your own will, LPAs or planning strategy in light of these changes, just get in touch. Being proactive now could save your family significant stress — and tax — later. Call me on 01323 766766 or use the contact form.