New Year Estate Planning 2026: Why January Is the Perfect Time to Act

Why January 2026 Is the Perfect Time to Plan Your Estate

The new year brings a natural opportunity to get your affairs in order. With major inheritance tax changes coming in April 2026 and April 2027, there's never been a more important time to review your estate planning.

Critical Deadlines in 2026:

6 April 2026: Business Property Relief and Agricultural Property Relief capped at £1 million
6 April 2027: Unused pension funds included in inheritance tax calculations
2030: 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 Over 56% of UK adults don't have a will, and 11% have wills that are outdated.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.

5 Estate Planning Resolutions for 2026

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
A basic will costs £150-£300 with a solicitor, or 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: £82 per LPA to register with the Office of the Public Guardian, plus solicitor fees if used (£300-£500).

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

April 2026 IHT Changes: What You Need to Know

The Autumn Budget 2024 announced significant changes to inheritance tax reliefs that take effect on 6 April 2026. If you own a business, farm, or AIM shares, these changes could significantly impact your estate.

Business Property Relief (BPR) Changes

Before April 2026: 100% relief on qualifying business assets (unlimited)

From April 2026: 100% relief up to £1 million, then 50% relief (effectively 20% IHT rate)

Example: A £3 million business currently pays £0 IHT. From April 2026: £1m at 0% + £2m at 20% = £400,000 IHT.

Agricultural Property Relief (APR) Changes

Before April 2026: 100% relief on qualifying agricultural property (unlimited)

From April 2026: 100% relief up to £1 million, then 50% relief

Good news: Autumn Budget 2024 confirmed that unused £1m allowance can transfer between spouses, giving couples up to £2m combined.

AIM Shares

AIM shares currently qualify for 100% BPR after 2 years. From April 2026, they will only receive 50% relief (no £1m allowance applies).

Action: Review your AIM holdings and consider whether they should remain part of your estate planning strategy.

What You Can Do Before April 2026

Gift qualifying assets: Gifts made before April 2026 can still qualify for full relief (subject to 7-year rule)
Review spousal transfers: Consider transferring assets to your spouse to utilise their £1m allowance
Seek professional advice: Complex estate planning changes require specialist input
Consider life insurance: A whole-of-life policy in trust can help pay any IHT bill without depleting the estate

Your January 2026 Estate Planning Checklist

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: Book an appointment with a solicitor or will writer if needed
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
February: If business/farm owner, seek specialist IHT advice before April 2026
March: Finalise any changes before tax year end (5 April)

Inheritance Tax Thresholds in 2026

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 2030
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.

Getting Professional Help

While simple wills can be done yourself or through online services, seek professional advice if:

You Should Use a Solicitor If:

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

Where to Find Help

The Law Society: Find a Solicitor - search for "wills and probate" specialists
Society of Trust and Estate Practitioners (STEP): For complex estate planning
Free Wills Month: Free wills from participating solicitors (typically March and October)
Citizens Advice: Free guidance on basic will requirements

Frequently Asked Questions

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. Seek professional advice for complex situations.

Should I be worried about the April 2026 changes?

Only if you own a business, farm, or significant AIM shareholdings worth over £1 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.

Make 2026 the Year You Get Your Affairs in Order

Estate planning isn't about death - it's about protecting the people you love. By taking action in January 2026, you're giving your family clarity, reducing potential conflict, and ensuring your wishes are respected.

With major tax changes on the horizon, there's never been a more important time to review your plans. Don't let another year pass without taking these crucial steps.

Start with your will. Everything else follows from there.

New Year Estate Planning 2026