Key Pension Changes for Private Client Practitioners

Fundamentals of IHT Treatment and the Major IHT Changes

Pensions being brought within the scope of Inheritance Tax is a complex and concerning prospect, with significant implications for private client practice – and even the fundamentals can sometimes feel unclear. Two important changes were introduced in the 2025 Budget on 26 November, with further developments anticipated.

This special one-day conference will revisit the core issues, before examining the recent changes and their potential impact. The programme will provide practical guidance on how to navigate the reforms and prepare for what lies ahead.

Professor Lesley King and John Bunker will jointly present the day, with expert input from Rebecca Bonner in the afternoon, offering her financial planning insight, experience and perspective on this challenging area.

Key Subjects

• How Pensions Work Currently
• Changes to IHT Treatment and Implications
• Practical Implications and What Clients Should Do
• How the Changes Will Affect Legal Practices
• Financial Planning
• Will Drafting and NRB Discretionary Trusts

Speakers

Professor Lesley King, Professional Development Consultant, University of Law

Rebecca Bonner, Independent Financial Adviser, Trigpoint Financial Planning

John Bunker, Solicitor, Chartered Tax Advisor and Lecturer

Conference Programme

9.30am Chairman’s Introduction

How Pensions Work Currently

Types of Pensions

• Defined Benefit
• Defined Contribution
• SIPPs

Pension-holder Accessing Funds

• Lump Sums
• Drawdown
• Annuities
• Tax treatment for pension-holder

Nominating Undrawn Funds

• Individuals
• Trusts
• IHT position
• Consequences of nominating, or not, and use of notes of wishes.
• What will pension scheme permit – e.g. will it allow drawdown?

Income Tax Implications for Nominees

• Accessing funds: lump sum, annuities or drawdown?
• Age of pension-holder at death

Changes to IHT Treatment and Implications

The Process: An Outline

• PRs liable to pay tax 6 months after death
• Budget 2025 changes: 50% retention and discharge from liability for late pension discoveries
• PRs able to direct PSAs to withhold 50% of pension but only for 15-month period
• How will it work? Some do’s and don’ts!

Practical Implications and What Clients Should Do

• Consolidate pension pots
• Consider their nominations
• Spending pension funds in preference to other assets
• Withdraw funds and make PETS
  • Tax efficient use for recipients
• Exempt gifts from pension funds, IHTA 1984, s21
• Life policies written in trust

How the Changes Will Affect Legal Practices

• The major changes to probate practice needed
• Planning for the 6-month and 15-month deadlines
• Estates that are amended after 15 months
• The place of Clearance after the 2025 Budget changes and PRs ongoing obligations
• Effect on speed and cost of administrations
• Taking pension wealth and nominations into account when drafting wills/estate planning
  • Overview of assets required

Financial Planning and Will Drafting

• Income tax and IHT charges combined on deaths of those 75 or over
• Enhanced role for annuities to cover spending and enable gifting
• Pensions and other savings and investment products compared
• What the changes mean to financial planning choices
• Pensions reverting to role of funding retirement
• Life Assurance to meet IHT and cover risks regarding gifts
• Spousal by-pass trusts revisited

Planning and Drafting

• Dealing with investment bonds – issues for PRs and trustees
  • Chargeable events
  • Bonds continuing after death of first life assured
  • Bonds held in trust
• Trusts nominated to receive pension benefits
  • Tax issues
  • Perpetuity problems
• Will Drafting
  • NRB discretionary trusts

4pm Close of Proceedings