UK inheritance tax will significantly broaden its reach next year as pensions become subject to estate calculations. Currently, individuals can transfer £325,000 free of tax and couples £650,000, with 40% charged above this threshold. The inclusion of pensions is expected to push thousands of previously untaxed estates into the inheritance tax system, drawing families into paying obligations for the first time.

Prime Minister Andy Burnham has previously proposed a 10% estate tax to fund social care, which currently costs far more than inheritance tax revenues and continues rising annually. Although the government has not formally announced this change or clarified whether it would replace or supplement existing inheritance tax, experts recommend families take planning steps immediately. With social care costs exceeding inheritance tax receipts by several times, advisors expect overall wealth taxation to increase rather than decrease in coming years.