UK Estate Planning Laws have changed in recent years, bringing new rules that affect inheritance tax, pensions, and business reliefs. Understanding these updates can save your loved ones from unnecessary tax, paperwork, and stress. At MAR Legal in Manchester, we help individuals and families navigate these changes clearly, affordably, and with peace of mind.
1. Residence, not domicile, now drives IHT rules (since April 2025)
What used to matter: Your “domicile” (your legal home) determined whether your non-UK assets were subject to UK Inheritance Tax (IHT).
What’s changed: As of 6 April 2025, the UK replaced this with a “long-term residence” test.
- If you’ve been UK tax resident for 10 of the last 20 years, your worldwide assets, including overseas property or investments, become liable for IHT.
- If you then leave the UK, a “tail” period continues for 3 to 10 years depending on how long you were resident.
Why it matters:
- UK expats returning home need to review wills and trusts—suddenly their foreign assets are covered.
- Non-domiciled individuals may face surprise IHT bills unless they plan carefully.
Example:
Anna, who moved back to Manchester in 2020 after 12 years abroad, owns a holiday home in Spain. As of April 2025, that overseas home is in scope for UK IHT—even though Italy, not the UK, is her traditional domicile.
2. Pensions come into play from April 2027
Current position: Defined contribution pensions often bypass IHT—putting them outside your estate.
Upcoming change: From 6 April 2027, most unused pension funds and death benefits will count towards IHT, and personal representatives (solicitors or family members) will be responsible for reporting and paying the tax GOV.UKThe TimesFinancial Times.
Impact:
- Your pension pot—larger than your £325,000 nil‑rate band—could trigger an IHT bill.
- Executors will face added administrative duties during a tough emotional time.
Case study:
Consider a couple with a £400,000 home and a £500,000 pension pot. Previously, only the home triggered IHT. From 2027, both combined could push them over the threshold, exposing ~£200,000 to 40% tax (£80,000 liability).
📌 MAR Legal can help personalise schemes to safeguard pensions, advise on lifetime drawings, and prepare executors for the new reporting duties.
3. Restrictions on Business & Agricultural Property Relief
What’s changing: From April 2026, relief that used to give 100% IHT exemption for qualifying farmland or businesses over £1 million will be capped at 50%
Consequences:
- Family farms and SMEs may face a 20% IHT charge on amounts above the threshold.
- This has triggered nationwide farmer protests, with many fearing forced asset sales The TimesThe Times+4Wikipedia+4The Times+4.
How MAR Legal can help:
- Assist with trust structures to mitigate tax
- Guide on lifetime gifting using “potentially exempt transfers”
- Set up discounted gift trusts to shelter assets and maintain family control
4. The Residence Nil-Rate Band remains, but thresholds frozen
The Residence Nil-Rate Band (RNRB), introduced in 2015, lets you leave up to an extra £175,000 tax-free if passing your home to children or grandchildren
However, both RNRB and the main £325,000 nil‑rate band have been frozen until at least 2030. With property values rising, more estates will exceed the threshold and attract IHT.
Tip for clients:
- Downsizing or making lifetime gifts can help reduce exposure.
- Consider setting up a late-life trust—such as a discounted gift trust—to leverage modern tax reliefs.
Quick Summary of Estate Planning UK Law changes in 2025 and beyond
| Change | Effective Date | Who Is Affected | How MAR Legal Can Help |
| Residence‑based IHT | 6 April 2025 | Long‑term UK residents with foreign assets | Revise wills, trusts, asset planning |
| Pension inclusion in IHT | 6 April 2027 | Anyone with sizable pension pots | Review pension strategies & wills |
| BPR cap at £1M | 6 April 2026 | Farmers, family firms | Advice on trusts, gifting, succession |
| Frozen thresholds | Until 2030 | Most estates | Use lifetime planning to reduce IHT |
What to do now: steps for peace of mind
- Review your residence history:
How many tax years have you been in the UK? Are you approaching the ten‑year mark? - Update your wills and trusts:
Include foreign assets and pensions; consider protections via trusts. - Think ahead on pensions:
Is drawing some now and gifting the rest a viable option? - Consider lifetime gifting or trusts:
Help family now while reducing future tax exposure. - Plan for farms and businesses:
Talk to us before April 2026 to explore transitional reliefs.
Example: Manchester Couple Safeguards Their Estate
Meet David (65) and Clare (62):
- Living in Didsbury
- Downsizing from a £600K home
- £450K each in pensions
- Inherited a family farm worth £1.2M
We helped them to:
- Create a trust from farm proceeds (partial business relief)
- Downsize residence and update RNRB claims
- Structure pension withdrawals to avoid future IHT
- Update wills to include foreign assets and reflect long-term residence
Result: They drastically cut estate IHT, secured inheritance plans, and retained control of assets.
Why MAR Legal is your estate-planning partner
At MAR Legal in Manchester, we combine clarity, compassion, and cost-effective legal advice to help clients stay current with UK estate planning:
- Expert Legal Team: Specialist solicitors experienced in wills, tax planning, trusts, farmland, and cross-border estates
- Transparent Fees: No hidden costs—agree fixed fees before we start
- Supportive & Practical: We break down complex laws into plain English and guide you every step
- UK & International Insight: Whether you have assets abroad or are a returning expat, we know how to navigate the new residence-based IHT landscape
Frequently Asked Questions About UK Estate Planning Laws
Ready to secure your legacy?
Changes to estate planning laws bring new risks—but also opportunities. You don’t need to go through this journey alone.
📞 Ring us on +44 (0)161 491 3933
📩 Email info@marlegal.co.uk
📍 Visit us in Spinningfields, Manchester, or connect virtually
Website: www.marlegal.co.uk
Let MAR Legal deliver peace of mind, you focus on enjoying life, not worrying about tomorrow.
Disclaimer: This post aims to provide general guidance and does not constitute legal advice. For tailored advice, please contact MAR Legal directly.