How “The Great Wealth Transfer” could affect your financial planning

Over the coming decades, more money will pass between generations than at any other time in history.

This so-called “Great Wealth Transfer” will see assets from the Silent Generation (born 1928–1945) and Baby Boomers (1946–1964) passed to their children and grandchildren. While it’s already underway, the pace of transfer is expected to accelerate in the years ahead.

According to FTAdviser, around £7 trillion will pass between generations in the UK over the next 30 years. The same report notes that up to 70% of wealthy families lose their wealth by the next generation, and 90% by the third.

While some erosion of wealth is inevitable through taxes, spending, and asset division, much of it is lost due to poor communication and a lack of preparation.

So, whether you’re planning to pass on wealth, expect to inherit in the future, or have already done so, it’s important to start planning now to protect your family’s future.

Read on to find out how the Great Wealth Transfer could affect your financial planning.

Inheritance Tax receipts have reached record levels

Inheritance Tax (IHT) is one of the main factors that can lead to families losing their wealth.

Data from Statista shows that IHT receipts have reached record highs over the past four tax years, totalling £8.25 billion in 2024/25 – a trend that’s expected to continue.

The key contributor to rising IHT receipts in recent years is that the nil-rate bands have been frozen while asset prices – particularly within the property market – have risen. The current allowances are:

£325,000 for the standard nil-rate band. This is the threshold above which IHT is payable, and it’s been frozen since 2009.
£175,000 for the residence nil-rate band. This is an additional allowance if you pass on a main residence to your children or grandchildren. It’s been frozen since 2020 and is set to remain at this level until 2030.
Estates worth over £2 million lose the residence nil-rate band on a tapering basis. The allowance tapers at a rate of £1 for every £2 above the threshold, meaning it’s lost completely for estates over £2.35 million. This upper limit has been in place since the residence nil-rate band was introduced in 2017.

Meanwhile, property prices have climbed sharply. According to the Property Investment Project, the average UK property price was around £150,000 in 2009, rising to £230,000 by the end of 2020 and nearly £273,000 in 2025.

The result is a growing disparity. While property and other assets have increased significantly in value, IHT thresholds have stayed largely the same. This effectively creates a “stealth tax”, where more of your wealth becomes liable to IHT even though the allowances haven’t changed.

So, while the Great Wealth Transfer will see many more valuable properties pass through the generations, a larger portion of estates is likely to be liable for IHT.

Inheritance Tax revenue is likely to increase due to the upcoming reforms

Aside from the freezing of the nil-rate bands, there are several upcoming reforms to IHT that could bring more of your estate into its scope.

For instance, pensions are set to become liable for IHT from 2027. This is a significant development, and the UK government estimates that around 50,000 estates will be affected. You can read more about the reforms to pensions and IHT in our previous article on the topic.

Moreover, there are changes to Business Relief (BR) and Agricultural Relief (AR) set to come into effect in April 2026.

Under the new rules, only the first £1 million of BR and AR qualifying assets will get 100% relief. Amounts above that will receive 50% relief, resulting in an effective IHT rate of 20%.

Furthermore, some shares – such as those listed on the Alternative Investment Market – will no longer qualify for 100% relief and will instead be capped at 50%, regardless of whether their value falls within the £1 million allowance.

These changes mean that you may need to reconsider traditional estate planning strategies to ensure your estate remains tax-efficient and well-structured amid the Great Wealth Transfer.

How to keep your estate efficient during the Great Wealth Transfer

With so much wealth set to change hands over the coming decades – as well as a widening IHT net – it’s important to start planning for how to keep estates efficient, whether yours or one you’re set to inherit.

Here are some of the strategies a financial planner may explore with you.

Maximise your nil-rate bands

Making full use of your nil-rate bands remains one of the most effective ways to mitigate IHT, even though they’ve been frozen for several years.

If you maximise your individual allowances, you can pass on up to £500,000, but remember you may lose some or all of the residence nil-rate band if your estate is worth over £2 million.

You can also pass on your estate to your spouse IHT-free and combine any unused allowances. This means you can collectively pass on up to £1 million to your beneficiaries before they pay IHT.

A financial planner can help you restructure your estate plan to maximise this opportunity.

Give gifts

Gifting assets to your loved ones can take them outside of the scope of IHT, provided you survive for seven years after making the gift.

If you die within seven years, it will be considered a potentially exempt transfer (PET) and will be subject to IHT at a tapered rate, unless it is a:

Sum of money within the annual gifting allowance of £3,000. This can be backdated by a year, and couples can combine their allowances, meaning you could collectively gift up to £12,000.
Wedding gift. You can gift up to £5,000 for a marriage, depending on your relationship to the bride or groom.
Small gift of up to £250 that doesn’t form part of a larger gift.
Regular payment from your income that doesn’t adversely affect your standard of living.

A financial planner can help you explore how gifting could play a role in your estate plan.

Place assets and life insurance in trust

Placing assets in trust takes them outside of your estate for IHT purposes. This can be a valuable way of ensuring your wealth remains efficient and is used according to your wishes.

Moreover, taking out life insurance and putting it in trust ensures the payout from the policy isn’t liable for IHT. This can provide a significant boost to your beneficiaries and could even cover some or all of the outstanding IHT bill on your estate.

Explore Business Relief schemes

While BR is set to be reformed in the coming months, many of its benefits remain. A financial planner can help you explore how you can use BR as part of your wider estate plan, and they can advise you when adjustments need to be made based on the latest legislation.

Get in touch

If you’re concerned about how the Great Wealth Transfer could affect your estate plan or an inheritance you’re likely to receive, get in touch.

Email [email protected] or call us on 01625 466360.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, or trusts.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.