With significant changes to Inheritance Tax (IHT) reliefs announced in the Autumn Budget, now is the ideal time to revisit protection planning strategies with your customers, particularly those who own farms, businesses, or have non-UK domiciled status.
From April 2026, Agricultural and Business Property Reliefs (APR and BPR) will be capped at £1 million. Any value above this threshold will be subject to IHT at 20%. In addition, from April 2025, non-domiciled individuals will transition to a residence-based IHT regime, potentially exposing their worldwide assets to UK IHT after 10 years of UK residency.
What can mortgage advisers do?
Whilst you can’t advise customers on the type of trust that is required or the tax implications, you can provide them the information and encourage them to seek guidance from a tax specialist. Stonebridge network members can also find a customer guide about trusts in the Revolution library and the Client Portal.
Placing life insurance policies in trust remains one of the most effective methods of mitigating IHT, safeguarding customers’ estates, and ensuring swift, efficient payment of proceeds to beneficiaries.
Crucially, a policy written in trust is not only excluded from the taxable estate, but it also bypasses the probate process entirely. This ensures that funds are available exactly when they’re needed, often within days or weeks, rather than being held up in months of probate delays.
That speed and certainty can make the difference between a smooth estate transition and the forced sale of treasured family assets.
Key considerations for mortgage and protection advisers
Of course first and foremost, you should advise customers to seek guidance from a tax specialist.
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Keep it outside the estate – A life policy written in trust falls outside the taxable estate, providing a tax-free lump sum to beneficiaries.
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Avoid probate delays – Policies held in trust are paid directly to the trustees, avoiding probate, and providing faster access to funds for urgent expenses or IHT liabilities.
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Select the right trust structure – Use bare trusts when beneficiaries are fixed, or discretionary trusts for greater control, flexibility, and adaptability over time.
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Tailor the trust with bespoke clauses – Enable customers to update beneficiaries or modify terms, as circumstances change.
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Match cover to liabilities – Consider whole-of-life policies for long-term estate planning, and term insurance for short-term needs, such as covering the seven-year taper period on gifts.
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Act early – Delaying action can lead to increased premiums or limited options. With reform on the horizon, early planning is critical to minimise risk.
What’s at stake?
Without appropriate planning, families may be forced to sell homes, farmland, or business assets to meet unexpected tax liabilities, often at short notice and potentially below market value.
A life insurance policy held in trust can prevent this, providing immediate liquidity, preserving family wealth, and giving customers the reassurance that their legacy will pass smoothly to the next generation.
This blog content is inspired by IFA magazine
