With just six months to go until major Inheritance Tax (IHT) changes come into force on 6 April 2027, we’re urging clients not to leave planning until the last minute.

From April, most unused pension funds and pension death benefits will be included when calculating IHT. In many cases, pension death benefits that currently sit outside an estate will instead form part of the IHT calculation, while personal representatives will also take on new responsibilities for reporting and paying any tax due.

Widely regarded as one of the most significant changes to retirement and estate planning in recent years, the reforms are prompting a seismic shift in wealth planning conversations. For families hoping to preserve and pass on wealth efficiently, the implications could be considerable.

No one-size-fits-all solution

The new rules mean pension and estate planning can no longer be viewed in isolation. Every family’s circumstances, objectives and legacy ambitions are different, making bespoke advice more valuable than ever.

Strategies such as establishing gifting plans, restructuring assets, reviewing pension drawdown or considering life insurance may all play a role in mitigating an IHT liability. However, these decisions require careful analysis, discussion and time to implement. Leaving planning until the final weeks before the changes take effect could limit the options available.

Beware of costly scams

Periods of regulatory change often create opportunities for fraudsters. Experts fear criminals will exploit uncertainty by promoting schemes claiming to eliminate IHT through pension transfers or alternative investments. The most recent figures show more than £17m was lost to pension fraud across the UK in 2024 – equivalent to over £48,000 every day¹.

Mike Ambery, formerly Retirement and Savings Director at Standard Life and just appointed to direct Aviva’s wealth policy, has warned, “Scammers thrive on fear and uncertainty… As we move closer to the rule change, fraudsters are likely to prey on any confusion, perhaps presenting themselves as offering so-called ‘solutions’ such as moving pension savings into arrangements that claim to avoid Inheritance Tax altogether. Offers like these might sound reassuring, but they can put people’s retirements at serious risk.”

Act early – not urgently

The changes have understandably raised questions, but reacting in haste can be just as damaging as doing nothing. Inheritance planning can be an emotive subject, yet protecting family wealth requires informed, considered decisions rather than rushed action. Seeking trusted financial advice now allows time to understand the options available, build an appropriate strategy and make decisions with confidence. Let’s talk it through.

¹Action Fraud

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority does not regulate Will writing, tax and trust advice and certain forms of estate planning. Gifting and trust strategies can have tax implications and may not be suitable for everyone.

Changes are on the horizon. The biggest overhaul of the ISA (Individual Savings Account) regime in several years is coming into effect on 6 April 2027, with new rules designed to encourage more people to invest rather than hold cash. While the overall annual ISA allowance remains unchanged, there are several important changes savers should be aware of.

Cash ISA allowance reduced for under-65s

From April 2027, the Cash ISA allowance for anyone under 65 will fall from £20,000 to £12,000. However, the overall ISA allowance will remain £20,000, meaning the remaining £8,000 can still be invested into a Stocks & Shares ISA or another eligible ISA product. Savers aged 65 and over will continue to have the full £20,000 Cash ISA allowance available, including anyone who turns 65 during the 2027/28 tax year.

Changes for Stocks & Shares ISAs

The government is also introducing measures to discourage investors from using Stocks & Shares ISAs simply as cash savings accounts. Interest earned on uninvested cash within these ISAs will be subject to a 22% charge, collected by the ISA provider. Importantly, this does not apply to returns from investments such as shares, funds, bonds or ETFs, or to returns from Money Market Funds held as part of a diversified portfolio. Only the return on cash itself is in scope. The charge will be collected by the ISA manager.

In addition, from 6 April 2027, under-65s will no longer be able to transfer from a Stocks & Shares ISA into a Cash ISA, although transfers in the opposite direction will still be allowed. Transfers from a Cash ISA into a Stocks & Shares ISA will still be permitted without restriction. Individuals aged 65 and over are exempt from the transfer restriction, from the start of the tax year in which they turn 65.

Note – ISA transfers do not count against the annual subscription limit, so a client could transfer their entire Stocks & Shares ISA cash balance into a Cash ISA before the deadline, avoiding the charge that would otherwise apply to the interest on uninvested cash from April 2027.

What about Lifetime ISAs?

The government has also announced plans to phase out Lifetime ISAs (LISAs), although existing account holders can continue contributing under the current rules while a new First Time Buyer ISA is being considered (consultation closed August 2026) – we’ll keep you posted on developments.

With significant changes ahead, now is a good time to review your ISA strategy and ensure your savings remain as tax efficient as possible.

Tax treatment depends on individual circumstances and may change in future. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Keeping a healthy cash buffer has long been considered the cornerstone of good financial planning. Having money set aside for unexpected expenses is sensible and essential, but when cash becomes a significant proportion of your wealth, it can begin to work against your long-term financial goals.

The UK’s growing cash mountain

Research¹ estimates that UK households hold around £218bn in cash above emergency savings needs. Around 5.7 million working-age adults (27%) have cash sitting beyond what they need as a precautionary reserve.

Perhaps more striking is who is holding this surplus. Higher-income, older and more financially secure individuals account for the largest cash balances. In other words, many affluent investors are choosing to leave substantial sums sitting in cash.

For surplus cash holders, investment participation is limited, with typically just 33% of their investable assets held in investments.

Why are wealthy investors holding back?

The issue is rarely a lack of financial resilience. Most surplus cash holders report being financially secure and capable of covering unexpected expenses. Instead, behaviour appears to be the biggest barrier.

Research found that 75% of surplus cash holders agree it is better to ‘play it safe’ with savings, even if investing is likely to generate higher returns. This reflects a natural tendency towards loss aversion. When markets feel uncertain, cash can seem reassuring.

Given today’s backdrop of geopolitical tensions, persistent inflation concerns and economic uncertainty, that caution is entirely understandable. However, while cash has an important role within a financial plan, holding excessive amounts for prolonged periods can leave money losing purchasing power and missing valuable growth opportunities.

Putting your wealth to work

Beyond your emergency reserve and planned short-term spending, your wealth should be working towards your future objectives.

Nothing is guaranteed when investing, and markets will always experience periods of volatility. Historically, diversified investments have often generated higher long-term returns than cash, although this is not guaranteed and investors could receive back less than they invest.

The right balance between cash and investments is different for everyone and should always reflect your goals, time horizon and attitude to risk.

Investing with confidence

There is no one-size-fits-all solution. Every investment decision should be based on your unique circumstances, not market headlines.

A well-diversified portfolio, built around your objectives and reviewed regularly, can help manage risk while improving your long-term financial prospects. We work closely with clients to determine an appropriate level of cash, assess their attitude to risk and ensure investment decisions remain grounded in sound financial planning principles.

If you’re sitting on substantial cash reserves, it may be time to ask whether your money is protecting your future – or simply standing still.

¹Vanguard

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.