Published: 21/07/2025 By Hannah Duncan
Demand for life insurance amongst home and business owners has surged following changes to inheritance tax announced in the October Budget. Individuals with assets are increasingly taking out whole of life policies to help cover future inheritance tax bills.From April 2026, agricultural and business property relief will be restricted, with estates above £1 million facing a 20% inheritance tax charge (previously fully exempt). The changes have prompted a rise in enquiries about life insurance options that can be used to cover these liabilities without forcing the sale of property or business assets.
There is also growing concern around unused defined contribution pension pots, which will be subject to inheritance tax from April 2027, prompting more people to consider insurance as a planning tool.
These changes are causing more and more people with increasingly modest levels of wealth to be affected by inheritance tax.
Whole of life insurance, particularly when placed in trust, is proving popular as it sits outside the estate for inheritance tax purposes and can pay out a lump sum on death. Some individuals are also exploring gift inter vivos policies to cover tax on large gifts made during their lifetime, and term insurance to protect against shorter-term liabilities.
If you're concerned about the potential cost of inheritance tax, get in touch with us to find out how we can help protect your estate.