The Intermediary – August 2025 - Flipbook - Page 67
P RO T E C T I O N
Opinion
Net gets wider
From April 2026, Agricultural
Property Relief (APR) and Business
Property Relief (BPR) will be subject to
a new cap, allowing only the first £1m
of combined qualifying agricultural
and business property to benefit from
100% IHT relief.
Any value above this threshold will
receive only 50% relief, resulting in an
effective Inheritance Tax rate of 20%
on the excess, as half of the standard
40% rate will apply.
While this change is expected
to affect up to 70,000 farms, its
implications extend well beyond the
countryside. With nil rate bands
frozen and property values continuing
to rise, many families may now find
themselves breaching IHT thresholds
and facing unexpected tax liabilities.
While tax planning is an essential
part of the conversation, it’s only one
side of the coin. The other is ensuring
that when liabilities arise, there’s
actually cash available to meet them.
That’s where liquidity planning
becomes key.
Liquidity generator
Against this backdrop, protection
products are invaluable, not only to
cover known liabilities but to provide
flexibility if valuations change or
reliefs are reduced:
Whole-of-life can provide a sum
assured to meet fixed or anticipated
IHT bill.
Joint life second death can be
particularly useful for customers
with substantial assets, but who
may not have ready access to
cash and need to cover a potential
IHT bill.
Gi inter vivos can help cover the
tapering liability if a donor dies
within seven years of making a gi.
Trusts ensure customers' loved ones
can access funds quickly, without
delays from probate or IHT.
With pensions set to be included
within IHT calculations, it’s likely that
the protection landscape will look very
different in 12 months’ time. Royal
London’s interim results for H1 2025
already highlight a change in adviser
behaviour.
Protection new business is up 14%
to £455m, with strong demand for
whole-of-life and joint life second
death products.
Advisers may soon find the IHT
conversation unavoidable. Aer
all, without it, families may face
forced sales of property, land, or
business assets.
Professional connections
Complex IHT cases are rarely solved
by one professional working in
isolation. Advisers who cultivate
strong connections can deliver far
greater value:
Solicitors can support planning
business ownership structures,
partnership agreements, and
property titles to maximise
relief eligibility.
Will writers help ensure the
estate is properly structured while
maximising family financial
planning opportunities.
Tax specialists and accountants are
key in ensuring accurate valuations
and to secure available reliefs.
Formal referral arrangements or
joint-client meetings can transform
the quality of outcomes. And under
Consumer Duty, holistic collaboration
is a genuine route to beer results.
Financial fragility
The Royal London resilience data
underlines a growing paradox that
many households are asset-rich but
cash-poor.
Higher earners are more likely to
hold protection products (42% of midlifers have some form of cover), but
they also face liquidity challenges if
hit with a sudden IHT bill on an asset
they don’t wish to or can’t sell.
This makes the case for whole-oflife and second-death policies even
stronger, by converting a regular
premium into a payout when it’s
GREGOR SKED
is senior protection
development and technical
manager at Royal London
needed most. When set up in trust,
they bypass probate delays and IHT.
Supporting clients
Discussing IHT in protection advice
isn’t about fear, it’s about showing
how changing rules, lost reliefs, and
shiing liabilities can impact families.
The earlier the conversation, the more
options remain.
Protection reviews are a good
entrypoint. Clients may find that
existing cover has been based on
outdated valuations, and their
estates may now far exceed certain
thresholds. A gied deposit, a
business transfer, or even a surge
in local property prices can all tip a
family into the IHT net.
Let’s think differently about
protection advice.
The tightening IHT environment
and HMRC’s growing scrutiny are
reshaping how advisers should
approach protection. Whole-of-life,
joint life second death, gi inter
vivos, and trusts are no longer niche
tools, they are central to preserving
family wealth.
The advisers who will stand out
over the next few years will be those
who combine technical product
expertise with strong professional
networks, ensuring that every
protection recommendation is
part of a coordinated, future-proof
estate plan. ●
August 2025 | The Intermediary
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