{"id":387860,"date":"2026-04-19T22:46:22","date_gmt":"2026-04-19T22:46:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/387860\/"},"modified":"2026-04-19T22:46:22","modified_gmt":"2026-04-19T22:46:22","slug":"hmrc-inheritance-tax-warning-as-countdown-begins-to-major-rule-change","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/387860\/","title":{"rendered":"HMRC inheritance tax warning as countdown begins to major rule change"},"content":{"rendered":"

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown says “the clock is ticking down”<\/p>\n

05:45, 12 Apr 2026Updated 11:09, 19 Apr 2026<\/p>\n

\"elen<\/p>\n

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown says “the clock is ticking down” <\/p>\n

UK households are being warned over a huge inheritance tax shake-up coming next year. <\/a>Helen Morrissey, head of retirement analysis at Hargreaves Lansdown says “the clock is ticking down” towards unused defined contribution pensions, like workplace pensions, becoming part of estates for Inheritance Tax (IHT) purposes.<\/p>\n

From April 6, 2027 most unused pension funds and death benefits will be added to the value of the estate. Pensions generally sit outside of estates currently, and therefore aren’t included in inheritance tax calculations after you pass away.<\/p>\n

After April 6, they will be added to a pot taxed at 40% over the \u00a3325,000 tax-free threshold, <\/a>known as the nil rate band. There is another band called the \u2018residence nil rate band\u2019 worth up to \u00a3175,000 that allows a single parent also bequeathing their family home to a child or granchild pass on up to \u00a3500,000-worth of their estate outside of inheritance.<\/p>\n

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Ms Morrissey says the pension rule change coming into effect next year “has attracted a lot of attention, but it\u2019s important not to panic – the number of estates liable for inheritance tax has grown, and will continue to grow, but they will remain in the minority so do check if it will be an issue for your family”.<\/p>\n

“If there is a potential looming liability, there are steps you can take to lessen its impact, though it will need careful planning.”<\/p>\n

“There are various allowances you can make use of to reduce the value of your estate,” Ms Morrissey explained.<\/p>\n

“You can gift any amount of money to a loved one and it will fall out of your estate for inheritance tax purposes after seven years.<\/p>\n

“These are known as Potentially Exempt Transfers (PET). If you die within that time, inheritance tax may need to be paid, though potentially at a reduced rate.”<\/p>\n

Another important rule she flags is what tax experts call “gifting out of surplus income”.<\/p>\n

This process allows you to give away any amount, with the funds coming out of you estate for IHT purposes straight away.<\/p>\n

“However, there are rules,” she added. “The gift needs to come from income, not capital. It needs to be made on a regular basis, and it must not affect your standard of living.<\/p>\n

“Examples of this could include paying school fees for a grandchild or contributing to a Junior ISA.”<\/p>\n

She added: “So, for instance, if you were to gift your home away to a loved one but continue to live in it rent- free then it could be seen as a gift with reservation \u2013 i.e. you are still benefiting from it. If this is the case, then your estate could be landed with a bill.”<\/p>\n","protected":false},"excerpt":{"rendered":"Helen Morrissey, head of retirement analysis at Hargreaves Lansdown says “the clock is ticking down” 05:45, 12 Apr…\n","protected":false},"author":2,"featured_media":387861,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,7209,111,139,69,244,245],"class_list":{"0":"post-387860","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-hmrc","11":"tag-new-zealand","12":"tag-newzealand","13":"tag-nz","14":"tag-personal-finance","15":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/387860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=387860"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/387860\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/387861"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=387860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=387860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=387860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}