By Chase de Vere Independent Financial Advisers, in partnership with IPSE

The Autumn Budget introduced significant changes to Inheritance Tax (IHT) that could impact your estate plans — particularly for self-employed professionals who rely on pensions or business assets to pass on wealth tax-efficiently. If you’re running your own business, working through an umbrella company, or saving for retirement, these updates mean it’s time to rethink your financial strategy.

At Chase de Vere, IPSE’s partner for independent financial advice, we’re here to explain the changes, what they mean for you, and how you can adapt your plans to protect your estate for future generations.

What are the key IHT changes?

The recent Budget introduced three main reforms that could impact self-employed professionals:

1. Freezing of IHT thresholds

The nil-rate band of £325,000 (the tax-free threshold) has been frozen until April 2030. The additional residence nil-rate band (for passing on your home to direct descendants) also remains fixed at £175,000.

• With property and asset values rising, more estates will exceed these thresholds due to fiscal drag, increasing IHT liabilities for many families.

2. Pensions now included in IHT calculations

From April 2027, unused pension savings will be included in the value of your estate for IHT purposes.

• Previously, pensions were exempt from IHT, making them a powerful tool to preserve wealth for beneficiaries.
• Now, pension assets exceeding the IHT threshold could be subject to the 40% IHT rate.

For self-employed individuals, who often rely heavily on pensions for retirement and estate planning, this change adds significant complexity and potential tax exposure.

3. Reform of business property relief (BPR)

From April 2026, a £1 million cap will apply to business assets eligible for 100% relief.

• Business assets above £1 million will only qualify for 50% relief, meaning the excess could be taxed at 20%.
• This change particularly affects self-employed professionals and business owners with high-value assets, as more of the business will now fall within the IHT regime.

Why these changes matter for you

For self-employed professionals, these reforms impact two key estate planning strategies: pensions and business property relief.

• Pensions: No longer offering full shelter from IHT, pensions could now increase the tax burden on your estate.
• Business relief: Business owners who planned to pass on significant assets tax-efficiently may need to explore alternative options to reduce the tax liability on their estate.

The result? Higher IHT bills, potential disruptions to family businesses, and the need for careful, proactive estate planning.

What can you do now?

While these changes are significant, there are still strategies to help reduce your IHT liability and pass on your wealth efficiently:

1. Trusts: Moving assets into trusts can help remove them from your taxable estate while ensuring they pass to beneficiaries in line with your wishes.
2. Gifting strategies: Make use of your annual gifting allowance (£3,000 per year) to gradually reduce the size of your estate. Gifts made at least seven years before death are exempt from IHT.
3. Life insurance: A life insurance policy written in trust can provide funds to cover IHT liabilities, preventing beneficiaries from having to sell assets.
4. Pension planning: While pensions are changing for IHT, they remain valuable for retirement and tax-efficient planning.
5. Tax-efficient investments: Certain vehicles, such as Enterprise Investment Schemes (EIS), still qualify for IHT relief. However, it’s important to note that EIS are high-risk investments and may not be suitable for everyone. You should always seek professional advice before considering these options.

Join our IHT planning webinar

To help you understand these changes and explore the best strategies to protect your estate, Chase de Vere is hosting an IHT planning webinar on 21 January.

During the session, our expert advisers will:

• Explain the Budget changes to pensions and business relief.
• Highlight their impact on self-employed professionals and business owners.
• Share practical steps to minimise your IHT liability and protect your family’s financial future.

Register for the IHT webinar here.

Alternatively, if you’d prefer to discuss your personal circumstances sooner, you can book a complimentary initial consultation with a Chase de Vere adviser here.

Take control of your estate planning today

The changes to pensions and business property relief mark a major shift in inheritance tax planning for self-employed professionals. By acting now, you can ensure your estate is protected and passed on as efficiently as possible.

At Chase de Vere, we specialise in helping self-employed professionals navigate complex financial changes. Whether you’re running your own business, working through an umbrella company, or planning for retirement, our independent advisers are here to help you plan for the future with confidence.

Take action today—register for our IHT webinar or book a complimentary meeting with one of our advisers.

Important disclaimers

• The Financial Conduct Authority (FCA) does not regulate taxation and trust planning.
• Tax treatment depends on your individual circumstances and may change in the future.
• Enterprise Investment Schemes (EIS) are high-risk investments and may not be suitable for all investors. Capital is at risk, and returns are not guaranteed.
• This article is for information purposes only and does not constitute financial advice. You should seek professional advice tailored to your situation before making any decisions.