Investment manager, Downing, is expanding estate planning support for advisers and their clients as forecasts suggest inheritance tax (IHT) receipts will surge by 67% over the next five years.
Downing’s new free to use inheritance tax calculator will enable advisers to model clients’ IHT liabilities ahead of major legislative changes, including the inclusion of unused defined contribution (DC) pensions in estates from the 2027/28 tax year, to support estate planning decisions.
The Office for Budget Responsibility (OBR) forecasts total IHT receipts are set to increase 67% over the next five tax years from around £8.7 billion in the 2025/26 tax year to £14.5 billion in the 2030/31 tax year.
The projected increases in IHT receipts could mean estates in London will be paying around £3.3 billion in 2030/31 with the South East contributing £3.2 billion and the South West around £1.5 billion. The East of England will be the fourth highest region, paying more than £1 billion at £1.45 billion. In the North West, total receipts are forecast to be around £730 million and around £507 million in Yorkshire & The Humber.
Downing’s IHT calculator enables advisers to view estimated IHT liabilities, including the impact of business relief reforms that came into play from 6th April 2026 and the inclusion of unused DC pensions within estates from 6th April 2027.
The calculator, which is available via Downing’s Adviser Hub, allows advisers to export a co-branded report showing a summary of their clients’ IHT positions for use in meetings.
It includes an exclusive rebalancing function for business relief investments, so advisers can shift values between AIM and unquoted business relief holdings to model different planning scenarios and optimise mitigation strategies.
Changes from this month mean that qualifying agricultural property relief and business relief assets benefit from 100% relief up to £2.5 million per individual (combined limit for APR and BR). Above that threshold, relief is available at 50%, resulting in an IHT charge on the excess.
Downing research shows advisers reported a 76% rise in the proportion of clients using business relief for IHT planning while nearly 60% of advisers estimate between 20% and 30% of their IHT-planning clients use business relief solutions.
Pension reforms are driving estate planning activity – nearly half (47%) of advisers say clients are cutting pension contributions to invest in IHT solutions, and 30% report clients are withdrawing pension funds to support estate planning.
Government projections suggest the pension IHT changes will raise a cumulative £3.44 billion in additional receipts over the first three years of implementation. Additionally, the government has extended the freeze on the nil-rate band threshold, which has been fixed at £325,000 per person since 2009, until April 2031.
Rebecca Ward-Howes, head of product at Downing, said: “IHT receipts have reached record highs and, with further increases forecast over the next five years, the imperative for robust estate planning has never been greater. Recent policy changes have prompted every adviser to fundamentally revisit all estate planning with clients - and in doing so, they are accelerating real innovation across the IHT planning landscape.
"At Downing, we recognise that advisers need more than product solutions; they need the tools and supporting materials to model complex scenarios with confidence and communicate outcomes to clients in a compelling, accessible way.
"We are seeing strong demand from advisers for Business Relief, with successive Budgets adding further momentum. We responded by building what we believe is a best-in-class planning tool - and the market has validated that. Since launch, 124 advisers have adopted the tool, with feedback overwhelmingly affirming it as superior to what they were previously using.”
