Investment - Articles - 33 percent HNWIs actively looking to guard pensions from IHT

 Alex Pugh, financial planner at Saltus says strategies like annuities, gifting or business relief investments all have a place

 With the Autumn Budget fast approaching on 26 November, new data from the latest Saltus Wealth Index Report reveal that high net worth individuals (HNWIs) see Inheritance Tax (IHT) as one of the most unfair element of the UK’s tax system – and are increasingly concerned about the impact of new rules bringing pensions into scope for IHT liabilities from 2027.

 The survey of 2,000 HNWIs with at least £250,000 in investible assets, from wealth management firm Saltus, shows that 17% believe IHT is the most unreasonably high tax, well ahead of Capital Gains Tax and Corporation Tax. When asked where the threshold should sit, the average response was close to £600,000, highlighting how out of step the current £325,000 nil rate band has become since it was introduced in April 2009.

 HMRC data show that IHT receipts reached a record £8.2 billion in the 2024-25 tax year - £0.8bn higher than the same period the year before – underlining how frozen thresholds are drawing more households into the tax net. The five months to August 2025 alone saw IHT receipts reach £3.7bn.

 There has also been growing speculation in recent weeks about whether future fiscal events could target other pension benefits – including the 25% tax-free lump sum entitlement – although most experts view such a move as politically risky and technically complex. This speculation has fuelled further unease among savers already adapting to the new inheritance tax rules.

 The findings suggest that tax anxiety is now one of the biggest drivers of financial planning and private wealth management among HNW investors, with a growing number looking to trusts or other vehicles to manage future exposure.

 The decision to include pensions in the IHT net from 2027 is already estimated to bring tens of thousands of additional estates into scope for the first time. Nearly three in ten (28%) HNWIs say they are worried about how these rule changes will affect how they pass on their pension benefits, while others admit they are unsure how the new framework will work in practice.

 The Wealth Index Report also found that support for reform of IHT is strong, with almost a third (30%) of respondents believing it should be abolished entirely. Additionally, almost half (46%) think the threshold should be raised, from the current £325,000 – frozen until 2030 – with respondents’ average preferred threshold sitting at around £600,000, nearly double the existing level.

 Alex Pugh, financial planner at wealth manager Saltus, said: “Tax has become one of the biggest sources of uncertainty for clients this year, not just because of what’s been announced, but because of what might come next. Inheritance Tax in particular is politically sensitive, and the decision to bring pensions into scope from 2027 has really sharpened focus on long-term planning. Many clients are asking whether the rules could change again, and how to prepare without making reactive decisions.

 “The most common question I’ve had recently is about tax-free cash. Clients are understandably nervous about whether that could be targeted next. This concern underlines just how much confidence has been shaken by the pace of change.

 “Now more than ever, clients need to approach inheritance and legacy planning thoughtfully. There’s no one size fits all answer. Strategies like annuities, gifting or business relief investments all have a place depending on individual goals. What matters is keeping planning aligned to values and long-term objectives, rather than reacting to every headline.”