Farra is a death administration assistant for UK families. Get step-by-step guidance for registering a death, applying for probate, notifying banks, and managing bereavement admin. From essential documents to practical checklists, Farra simplifies estate paperwork and funeral-related tasks so you can focus on what matters.
6 April 2026: BPR/APR capped at £2.5m (20% IHT above). 6 April 2027: Pensions included in IHT (double taxation). 56% UK adults lack wills. New Year tasks: create/update will, review IHT position (£325K threshold frozen until 5 April 2031), consider lifetime gifts (7-year rule), update pension/insurance beneficiaries, appoint lasting power of attorney.
The new year brings a natural opportunity to get your affairs in order. With the inheritance tax changes that took effect in April 2026 and those due in April 2027, it is a useful moment to review your estate planning.
Key dates:
- 6 April 2026 (passed): Business and Agricultural Relief capped at £2.5 million combined
- 6 April 2027: Unused pension funds included in inheritance tax calculations
- 5 April 2031: IHT thresholds remain frozen at £325,000
The New Year Advantage:
January is when we're most motivated to make positive changes. Over 56% of UK adults don't have a will, and 11% have wills that are outdated. This year, make estate planning one of your resolutions that actually sticks.
1. Create or Update Your Will
If you don't have a will, your estate will be distributed according to intestacy rules - which may not reflect your wishes at all.
Key points:
- Unmarried partners receive nothing under intestacy rules
- Stepchildren are not automatically included
- Without a will, courts decide who raises your children
- Will-writing costs vary by provider and complexity, and are free through some charities
Update your will if: You've married, divorced, had children, bought property, or experienced significant changes in your finances since it was written.
2. Review Pension Beneficiary Nominations
From April 2027, unused pension funds will be subject to inheritance tax. This makes your beneficiary nominations more important than ever.
Action required:
- Log into your pension provider's website and check your current nominations
- Consider nominating your spouse/civil partner (IHT exempt)
- Update nominations if circumstances have changed (divorce, death, new children)
- Consider whether drawing down your pension earlier makes sense
This change could add an average of £34,000 to inheritance tax bills for affected estates.
3. Set Up Lasting Powers of Attorney
An LPA allows someone you trust to make decisions on your behalf if you lose mental capacity. Without one, your family may need to apply to the Court of Protection - a costly and stressful process.
Two types of LPA:
- Property and Financial Affairs: Managing bank accounts, paying bills, selling property
- Health and Welfare: Medical treatment decisions, care arrangements, life-sustaining treatment
Cost: £92 per LPA to register with the Office of the Public Guardian. Reductions and exemptions are available on a low income or certain benefits. Any professional fees are on top and vary by provider.
4. Document Your Digital Assets
The Property (Digital Assets etc) Act received Royal Assent in December 2024, meaning cryptocurrency and NFTs are now formally recognised as property that can be inherited.
Create a digital inventory:
- Cryptocurrency wallets and exchange accounts
- Online banking and investment accounts
- Email accounts and social media profiles
- Subscription services and digital purchases
- Password manager master password (store securely with your will)
Important: Never include actual passwords in your will (it becomes a public document). Instead, reference where secure password information is stored.
5. Discuss Your Plans with Family
One of the most valuable things you can do is have open conversations with your family about your wishes. This reduces conflict and stress during an already difficult time.
Topics to discuss:
- Where important documents are stored
- Your funeral preferences (burial vs cremation, type of service)
- Who your executors are and if they're willing to act
- Any specific bequests or sentimental items you want certain people to have
- Your wishes regarding life-sustaining treatment
The Autumn Budget 2024 announced significant changes to inheritance tax reliefs, which took effect on 6 April 2026. The allowance announced then was £1 million; the government raised it to £2.5 million on 23 December 2025, and £2.5 million is the figure now in force under Finance Act 2026.
Before April 2026: 100% relief on qualifying business assets (unlimited)
From 6 April 2026: 100% relief up to £2.5 million combined with agricultural relief, then 50% relief (effectively a 20% IHT rate)
Example: A £3 million business would previously have paid £0 IHT. From 6 April 2026: £2.5m at 0% + £0.5m at 20% = £100,000 IHT.
Before April 2026: 100% relief on qualifying agricultural property (unlimited)
From 6 April 2026: 100% relief up to £2.5 million combined with business relief, then 50% relief
Unused allowance can transfer to a surviving spouse or civil partner, giving couples up to £5m combined, but only if it is claimed on form IHT437. The October 2024 announcement had said the allowance would not be transferable; that was changed at the Budget in November 2025.
AIM Shares
AIM shares previously qualified for 100% BPR after 2 years. Since 6 April 2026 they receive 50% relief in all circumstances, and they do not use up the £2.5m allowance. See our April 2026 deadline guide for more detail.
The transitional rule for earlier gifts
The window for making gifts under the old uncapped rules has closed, and gifts made on or after 30 October 2024 do not escape the new rules simply by predating them:
- Where a gift of agricultural or business property was made on or after 30 October 2024 and the donor dies on or after 6 April 2026 within seven years of the gift, the £2.5m allowance and the 50% rate apply to that gift
- Gifts made before 30 October 2024 are not caught by that rule, and a donor who survives a gift by seven years takes it outside the estate either way
- Unused allowance transfers between spouses and civil partners on a claim, so it is not lost if it is not used on the first death
- Week 1: Locate your current will (if you have one) and review it
- Week 1: Check your pension beneficiary nominations online
- Week 2: Create a list of all your assets (property, savings, investments, pensions)
- Week 2: Document your digital assets and where passwords are stored
- Week 3: Decide whether you want a solicitor or will writer involved, and on what
- Week 3: Research Lasting Powers of Attorney if you don't have them
- Week 4: Have conversations with family about your wishes
- Week 4: Create a "letter of wishes" with funeral preferences and personal messages
- Month 2: If you own a business or farm, work out where the estate sits against the £2.5m relief allowance
- March: Finalise any changes before tax year end (5 April)
Understanding the current thresholds helps you assess whether your estate might be liable for IHT:
| Allowance | Amount | Notes |
|---|---|---|
| Nil Rate Band (NRB) | £325,000 | Frozen until 5 April 2031 |
| Residence Nil Rate Band (RNRB) | £175,000 | If leaving home to direct descendants |
| Combined (Single Person) | £500,000 | NRB + RNRB if qualifying |
| Combined (Married Couple) | £1,000,000 | Transferable between spouses |
RNRB Taper Warning:
If your estate exceeds £2 million, the Residence Nil Rate Band is reduced by £1 for every £2 over the threshold. Estates over £2.35 million lose the RNRB entirely.
A will can be written without a solicitor. The situations where people most often involve one, because the drafting or the tax is harder, are:
Situations that are harder to do alone:
- You own a business or farm
- You have property abroad
- You have a blended family (stepchildren)
- Your estate may be liable for IHT
- You want to set up trusts
- There's potential for a will to be contested
DIY Options Work If:
- Your situation is straightforward
- Everything goes to spouse then children
- No complex property or business interests
- Your estate is under IHT thresholds
- No potential for family disputes
Do I really need a will if I'm married?
Yes. While your spouse will inherit most of your estate under intestacy rules, they may not get everything - especially if you have children. Assets over £322,000 are split between spouse and children. A will ensures your spouse is fully provided for and avoids potential complications.
How often should I update my will?
Review your will every 3-5 years, or after major life events: marriage, divorce, birth of children/grandchildren, death of a beneficiary or executor, significant changes in assets, or moving to a different country.
What happens if my will is outdated?
An outdated will is still legally valid, but may not reflect your current wishes. Worse, marriage automatically revokes a previous will (unless made "in contemplation of marriage"), meaning you could die intestate without realising it.
Can I reduce my inheritance tax bill?
Yes, through legitimate planning: gifts (potentially exempt after 7 years), charitable donations (reduce rate to 36%), business and agricultural reliefs, life insurance in trust, and pension planning.
Should I be worried about the April 2026 changes?
Only if you own a business, farm, or significant AIM shareholdings worth over £2.5 million. For most people, the standard IHT thresholds (£325,000 NRB + £175,000 RNRB) remain unchanged. The pension changes in April 2027 affect more people - check your pension value and beneficiary nominations.
A will, a record of where things are, and an up-to-date beneficiary nomination are what the people administering an estate actually have to work from. Where they exist, the work is quicker and there is less to argue about.
Start with your will. Everything else follows from there.