Member News
Families in the North East considering how to protect up to 40% of their wealth from being handed over in inheritance tax to the Treasury now only have a small window of time left to act.
Regional accountancy and business advisory firm Azets has been inundated with enquiries following the government’s overhaul of the tax (IHT).
These include restrictions to agricultural and property reliefs from 6 April next year – just over four months from the beginning of this month [December] – and the extension of IHT to unspent pension pots at death from April 2027.
Based on latest HMRC tax-year figures for 2022–23, there were 555 estates in the North East with tax liability of £87m.
Jodie Barwick-Bell, a private client tax partner and family office adviser for the North East at Azets, which has offices in Durham, Newcastle and Teesside, said: “There are hundreds of thousands of families in the UK, if not more, with estates worth more than the IHT threshold of £650,000 thanks to accumulated savings, investments, pensions, raises in asset values, such as property, with many owning businesses as well which have significant value.
“If considered and compliant steps aren’t taken, they would need to hand over up to £400 in every £1,000 of their wealth to the Treasury.
“While the reforms will not take effect until 6 April, they are expected to have far-reaching consequences for many individuals and families.
“In most cases, IHT liabilities are expected to rise, making early planning essential for local business owners, farmers and individuals with pension savings.
“Against this backdrop, we’ve been inundated with concerned callers unsure how to proceed – and frustrated that a large chunk of what is their private wealth is in effect earmarked by the state for public money down the line, having already paid taxes over their working lifetimes.
“Enquirers are now close to the point where they are starting to run out of time to make changes by the start of the next tax year, particularly if they are thinking of transferring shares in a trading business or putting a farm into a trust, to get the valuations done and the transfers across.
“It would be full-on for advisors, and we know conveyancing firms will be particularly busy next April so there is a danger of delays which could scupper matters.
“Changing how your estate is handed on following your death is complicated – and no-one wants to leave loved ones with the stress of financial liabilities.
“Also worth bearing in mind – HMRC non-compliance checks and investigations are on the rise.”
Jodie added: “A look at HMRC’s IHT data for 2022–23 shows that 12,000 estates in the UK had £1m in cash and a further 4,500 estates had £2m in cash or above – cash which was clearly going to fall under IHT.”
Overhaul of the IHT regime
With draft legislation published in July 2025, key areas of change include:
- Newly imposed caps on certain IHT reliefs
- The implications for trusts
- Transitional provisions and their practical impact
- Reduced IHT relief on AIM-listed shares
- Changes to the IHT treatment of pensions
HMRC figures showed that 4.6% of UK deaths resulted in an IHT charge, with 31,500 estates paying the tax, with £6.7 billion raised, up by £0.7 billion from the previous tax year.
According to HMRC, the average effective tax rate paid by taxpaying estates was 13%, compared to the headline marginal rate of 40%, reflecting the impact of exemptions, reliefs and tax-free allowances.
The largest exemption set against assets were transfers between spouses and civil partners in 2022–23; nearly £6 billion was reported to HMRC as being transferred to surviving spouses and civil partners on death.
The combined value of agricultural and business property relief (APR, BPR) set against assets was £5.28 billion; the value of BPR claimed rose by £0.49 billion (17%), whilst the value of APR claimed rose by £0.37 billion (24%).
The value of exempted transfers to qualifying charities was £1.92 billion.
“In these HMRC figures, you can see how tax reliefs for APR and BPR have helped protect wealth,” said Jodie.
