A new poll of independent financial advisers reveals overwhelming concern about pensions falling within the scope of inheritance tax (IHT) and income tax for deaths occurring after 75 from April 2027.
According to Quilter's survey, 95% of more than 770 advisers polled are concerned, with almost half (45%) saying they are extremely concerned about the changes.
In response, advisers expect the impact to be widespread. Advisers expect two thirds (66%) of their clients to be affected and will require IHT advice, up from 52% earlier this year when asked the same question in Q1.
This shift comes against a backdrop of significant fiscal change. Frozen thresholds, cuts to capital gains tax (CGT) allowances and increased dividend taxation soon to come will and have already raised the tax burden on many households.
Bringing pensions into the IHT and income tax system adds further complexity for those planning later life and intergenerational wealth transfer.
The evolving landscape is prompting advisers to reconsider long-held assumptions that pensions should be the last asset touched in retirement.
Many believe clients will need more structured estate planning, including exploring different wrappers and trust options to protect family wealth. 93% say planning for the pension and IHT changes is now a top priority, while 90% want more support around trusts and wider estate strategies.
Roddy Munro, head of technical sales at Quilter, said: “Bringing pensions into the ambit of IHT has changed the rules of the game for retirement and estate planning. For years advisers have helped clients build pensions that could provide support both in later life and for loved ones when they are gone. The shift to bring pensions within IHT means those long-held assumptions need to be revisited and strategies adapted in good time.
“People want to feel confident that their hard-earned wealth will benefit their families rather than be lost to avoidable tax. Advisers are stepping up to provide that reassurance and are looking for the right guidance and tools to help determine where wealth should sit and in what wrappers going forward.
“By acting early, advisers can demonstrate real value and help clients protect their future choices. We are committed to supporting them through this change with clarity, strong technical expertise and practical solutions.”
