Three in 10 (30 per cent) people in the UK believe the changes to inheritance tax (IHT) outlined in last month’s Budget will reduce the amount they are able to leave behind in inheritance, research from Standard Life has revealed.

Furthermore, with pensions being brought into scope of IHT from 2027, 21 per cent were considering taking out an annuity in retirement to navigate this change.

Standard Life also found that 31 per cent were thinking about making financial gifts to family more regularly to avoid an IHT charge on their pension.

Standard Life retirement savings director, Mike Ambery, said that pension and IHT changes in the Budget had put renewed focus on the need for people to make sure they are effectively using their pension assets through retirement.

“The changes could mean more savers expect to be caught in the IHT net and will begin looking for ways to navigate this to reduce the value of the inheritable funds,” Ambery continued.

“There is an increased likelihood that people will want to spend their pension as retirement income to remain below the IHT threshold.

“As our research shows, one in five are considering taking out an annuity. As you don’t need to use the full pension pot when buying an annuity, this approach would allow retirees to provide themselves with a guaranteed income to live on while lessening any IHT bill and leave the remainder of their pension pot invested meaning they still benefit from various tax reliefs too.

“The announcements made in the Budget will affect people’s finances in different ways, so when thinking about making financial decisions around retirement, it remains essential that people shop around and make the most of advice and guidance to ensure they make the right decisions for them and those who might inherit their estate when they die.”

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