- Only 6%1 have made changes to their financial plans following the Government’s announcement that pensions will be brought into the scope of inheritance tax from April 2027
- A third of those aged 55 or over (36%) are oblivious to existing gifting rules that could help to reduce inheritance tax
- A small number of those aged 55 or over (6%) plan to give a financial gift this Christmas worth £1,000 or more
Two fifths (40%) of UK adults aged 55 or over - the equivalent of 8.5 million people - remain completely unaware of new rules that will see pensions brought into the scope of inheritance tax (IHT) from April 2027, new research from Canada Life reveals.2
According to the latest official data, the change announced by the Government in October’s Autumn Budget is expected to almost double the number of estates subject to inheritance tax, with almost one in ten (8%) forecasted to be captured by the tax each year by 2030. This is projected to generate £1.46bn by 2029/2030.3
Among those who are aware of the change and have changed their financial plans already, 57% plan to spend more of their savings, 41% are planning to gift more, and 38% intend to withdraw a lump sum from their pension. One in ten (11%) are even considering marriage as a means of passing wealth tax-free to a partner.
The research, which builds on findings from Canada Life’s Life100+ programme4, also reveals that approximately a third (36%) of those aged 55 or over are not aware of any of the listed current gifting rules which could help to reduce inheritance tax. Some of the least known gifting rules amongst those aged 55 or over were as follows:
- 79% are unaware that they can give gifts of up to £250 per person, to as many individuals as they want, without having to pay inheritance tax
- 78% are unaware that financial gifts made from income, given for birthdays or Christmas, are exempt from inheritance tax
- 65% are unaware that gifts between spouses or civil partners are free from inheritance tax
- 62% are unaware of the 'Annual Exemption,' which allows people to give away up to £3,000 in cash or assets each year without it being added to their estate for inheritance tax purposes. 91% were also unaware that you can carry forward any unused Annual Exemption to the following tax year
- 53% are unaware that financial gifts can be IHT-exempt if the donor lives for at least seven years after the gift is made
Furthermore, just 6% of those aged 55 or over are planning to give a financial gift to a loved one or charity this Christmas.
Looking ahead to 2025, only 12% of those aged 55 or over plan to give a financial gift (of the value of £1,000 or more) to a family member, loved one, or charity. Of those planning to gift in 2025, most (80%) plan to give cash savings, while 15% will draw from their pension. The primary recipients of these gifts are children (66%), grandchildren (29%), or other family members (13%).
Stacey Love, tax and estate planning specialist at Canada Life, comments:
“Despite the announcement in October’s Autumn Budget, our research reveals that 8.5 million adults 55 or over are completely unaware that pensions will be included in estates from April 2027, making them subject to inheritance tax. Although it seems like a long time away, many people may not yet realise that these changes could draw them into the inheritance tax net or could mean loved ones paying a higher amount on their estate.
“Fundamentally, it’s never too early to start considering what the implications may be for you and how you may be able to manage your inheritance tax bill during your lifetime – such as through gifting or setting up a trust. It’s also important to think about your retirement plans in light of the changes as well. You may want to consider seeking professional advice to help with your roadmap in later life.
“As people are expected to live longer lives, it’s crucial to start conversations early about finances with families or loved ones. Our Life100+ research found that almost a third (29%) of financial gifts are rejected by the intended recipient, indicating that discussions beforehand may not have happened. Furthermore, seven in ten (72%) of those who have talked to their beneficiaries about inheritance are satisfied with life, compared to just under six in ten (58%) of those who have not. Therefore, whilst it may feel uncomfortable in the short-term, there are many positives from having more open discussions – both for the benefactor, and beneficiaries in the long-term.”
-ENDS-
Notes to editors
- According to Canada Life’s research, 60% of those aged 55 or over are aware of the move to bring pensions within the scope of inheritance tax, and 6% of this group have made changes to their financial plans because of this.
- This research was conducted by Opinium among 2,000 UK adults aged 55 or over between 29 November - 3 December 2024.
- In the tax year 2021 to 2022, 4.39% of UK deaths resulted in an inheritance tax (IHT) charge. Source: Inheritance Tax liabilities statistics: commentary - GOV.UK
The move to bring unused pensions into the scope of inheritance tax from April 2027, announced at the 2024 Autumn Budget, will affect around 8% of estates each year. The move is projected to generate £1.46bn by 2029/2030. Source: Autumn Budget 2024 – HC 295. - More information about Canada Life’s Life100+ programme can be found at https://www.canadalife.co.uk/life100-hub/ The findings (commissioned by Canada Life and conducted by The Big Window) are based on online interviews with a representative sample of 3,400 UK adults aged 18 and over. Quotas were applied by age and gender and the data was weighted at the analysis stage to be representative of the UK adult population. Following the online survey, an all-day intergenerational forum comprising of twenty respondents, with eight in-depth interviews conducted. Respondents represented people from different life stages, backgrounds and generations. All fieldwork was conducted during May, June and July 2024. Additional information is available on request.
Enquiries:
Press enquiries should be directed to:
Elle McAtamney, Canada Life, 07913 568213, elle.mcatamney@canadalife.co.uk
About Canada Life:
Canada Life is part of a group of companies controlled by Great-West Lifeco Inc., a Canadian headquartered, international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses. Through its subsidiary companies, Great-West Lifeco operates in Canada, the United States, and Europe. Great-West Lifeco trades on the Toronto Stock Exchange under the ticker symbol GWO and is a member of the Power Corporation group of companies.
Canada Life Limited began operations in the United Kingdom (UK) in 1903 and provides UK individuals and businesses with a range of retirement, investment, insurance and wealth solutions. Canada Life offers individual annuities, pension de-risking solutions, home finance, estate planning and investment options, and workplace protection products.
Canada Life Limited (no.973271) is registered in England and Wales, authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Stonehaven UK Limited (no.05487702), trading as Canada Life, is registered in England and Wales and is authorised and regulated by the Financial Conduct Authority. Canada Life International Limited (no.033178C) and CLI Institutional Limited (no.108017C) are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance (Ireland) DAC (no. 440141) and Canada Life International Assurance (Ireland) DAC are authorised and regulated by the Central Bank of Ireland.
Canada Life Asset Management is the brand for investment management activities undertaken by Canada Life Asset Management Limited (no.3846821), Canada Life Limited and Canada Life European Real Estate Limited (no.03846823). Canada Life Asset Management Limited is authorised and regulated by the Financial Conduct Authority.
Please note that while Canada Life Limited and Canada Life Asset Management Limited are regulated as stated above, property management and the provision of commercial mortgages are not regulated activities.