How advisers can restart the estate-planning conversation before April 2027

Putting off inheritance tax planning can be expensive. For affluent families, waiting until 70 rather than starting at 50 could reduce the amount passed on by an average of £397,000 once unused pension funds enter the inheritance tax regime in April 2027. Apparently, ‘we’ll deal with it later’ still isn’t recognised by HMRC as an estate-planning strategy.

The figure comes from research by Octopus Investments, based on independent economic modelling by the Centre for Economics and Business Research and supported by Opinium research involving 200 UK financial advisers and 2,000 UK adults. Across wealthy UK families, the modelling puts the total cost of avoidable delay at an estimated £12.3 billion. Even under the current rules, starting at 50 rather than 70 could allow families to pass on an additional £258,000 on average, equivalent to £7.9 billion collectively.

There’s a sizeable gap between knowing when to act and actually doing it. UK adults believe estate planning should begin at 44.6 on average, yet advisers say the typical client doesn’t become open to the conversation until 61. That’s more than 16 years spent agreeing it matters while finding reasons not to discuss it. Some 86 per cent of people aged 45 to 49 have done no estate planning, and the figure is still 70 per cent among those in their 50s.

The tax rules are changing, but the familiar obstacle remains: the family conversation everybody agrees is important and nobody puts in the diary. Kristy Barr, head of retail investments at Octopus Investments, said: “The biggest threat to a family’s legacy isn’t tax – it’s the conversation that gets postponed.” Almost seven in 10 advisers have seen avoidable tax bills or family conflict caused by estate planning beginning too late, so the consequences don’t always remain inside a tax calculation.

Clients delay for understandable reasons. Many believe they’re too young, feel no immediate urgency or simply don’t want to discuss death and what happens afterwards. Apathy plays its part too, although an estate plan has yet to complete itself while sitting patiently on the to-do list.

The inclusion of unused pension funds in inheritance tax calculations from April 2027 gives advisers a clear reason to restart those conversations, particularly with families that have treated pensions as a tax-efficient way to pass wealth between generations. That doesn’t mean rushing clients into decisions simply to beat a rule change. It means reviewing the whole estate while there is still time to understand the options, make considered choices and involve the family where appropriate. By the time a client finally feels ‘ready’, some of those choices may already have disappeared.

For advisers, the next few months are likely to bring more inheritance tax calculations, strategy reviews and suitability reports as clients discover that existing plans may no longer work as intended. The Timebank can provide the technical analysis and report-writing support behind those conversations, leaving advisers more time to help clients make decisions while they still have decisions to make.

The most expensive part of inheritance tax planning may be the 20 years spent avoiding it.