The £40bn impact of the inheritance tax shake-up will prompt more families to spend or gift the money
For years, “spend your pension last” was the financial planning mantra recited by wealth managers. Following the Budget in October, this has changed to “spend your pension before Rachel Reeves does.” Inheritance tax will be extended to unspent pension pots from 2027 — prompting the well-advised wealthy to have a radical rethink of their retirement plans.
David Hearne, a chartered financial planner at FPP, says the measures will reshape the great generational wealth transfer. Many of his clients are now considering making regular pension withdrawals and funding pension contributions for their adult children, who will receive tax relief and employer contributions on the way in. He predicts equity release to extract value from the family home will be a popular tool.
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