David Hickmott

While the Autumn Budget did not bring significant new changes for wealth planning, the previously announced pension inheritance tax changes due in April 2027 remain an important reason for families to review their plans. From intergenerational gifting to divorce settlements, specialist advice can help families protect their wealth and long-term financial security.

Catriona Attride, partner in the private client team, and David Hickmott, principal associate in the family team at leading UK law firm Mills & Reeve, share their insights on managing tax uncertainty, safeguarding family assets and planning for future generations.

• The wider tax picture: Ongoing tax pressures highlight the need for families and business owners to plan ahead
• Protecting wealth across generations: Following a period of a changing tax landscape and ahead of the April 2027 inheritance tax changes to pensions, families should review pensions, gifting and succession plans
• Gifting and safeguarding assets: Parents should consider how gifts and asset transfers could affect family wealth, particularly if relationships break down
• Financial security through divorce: Settlements should account for future income, tax liabilities, retirement needs and business interests
• The value of specialist advice: Early legal and tax advice can help families make informed decisions and protect long-term financial security

Understanding the impact of tax changes on family wealth

David Hickmott said: “The run-up to this year’s Autumn Budget highlights the importance of considering how tax rules affect asset values and long-term financial planning. This is particularly relevant in divorce proceedings, where the tax treatment of pensions can influence how assets are divided. 

“While the Budget will not change the courts’ underlying approach to fairness and financial needs, looking beyond headline figures is essential for reaching an appropriate settlement.”

Catriona Attride added: “The last few Budgets have highlighted the cumulative pressure on business owners and wealthy families from inheritance tax relief changes, employer National Insurance contributions, rising minimum wages and business rates. While no further changes were announced in these areas in the Autumn Budget, continued uncertainty can affect confidence and the UK’s attractiveness to wealthy individuals.

“Our recent survey of 2,000 UK adults found that 47% had considered leaving the UK to live abroad long-term or permanently, highlighting the importance of greater certainty.”

Planning for pension inheritance tax changes

Catriona said: “From April 2027, most unused pension funds and pension death benefits will fall within the value of a deceased person’s estate for inheritance tax purposes. Families should review their pension and succession plans, rather than assume that leaving savings untouched will be the most tax-efficient option.

“Drawing pension income, taking an available tax-free lump sum or making lifetime gifts may be appropriate in some circumstances, but none of them will automatically be the most tax-efficient choice. Families should weigh potential tax savings against their future income needs and overall financial security. Regular gifts from surplus income may also qualify for an inheritance tax exemption without the usual seven-year survival requirement, provided the relevant conditions are met.”

David added: “For divorcing couples, these changes add another consideration when assessing pensions alongside other assets in a financial settlement. Whether to retain a pension or offset its value against property or other assets will depend on individual circumstances, including future income needs, retirement plans and potential tax liabilities.”

Gifting wealth to children and protecting family assets

David said: “Parents helping adult children with a property purchase should consider how their contribution would be treated if the relationship breaks down. A declaration of trust can record how ownership is divided when buyers contribute different amounts towards the purchase. Parents should also clarify whether their contribution is a gift or a loan, as this will affect whether they can seek repayment. If they confirm to a mortgage lender that the money is a gift, it may be difficult to argue later that it should be repaid.

“Trusts and prenuptial agreements may help protect family wealth, although some partners may be reluctant to sign a prenup as a condition of receiving financial support. During divorce, trusts or arrangements to fund children’s education may also offer ways to provide for children while preserving assets.”

Catriona added: “Gifting wealth can support succession planning, but families should consider the tax implications and their own financial security before transferring money or business assets. Trusts and family investment companies may offer ways to structure wealth for future generations. Taking advice beforehand can help families avoid unintended consequences and ensure transfers reflect their wishes.”

Balancing immediate needs with long-term financial security

Catriona said: “Families should approach the April 2027 changes as part of a wider review of their financial arrangements, weighing potential tax savings against the need for reliable income and financial security. Protecting family wealth is not simply about reducing the tax bill but making informed decisions that support current needs and preserve wealth for future generations.”

David added: “In divorce, these trade-offs can be particularly significant when deciding how to divide property and pensions. Retaining the family home in exchange for a smaller pension share may provide short-term stability, particularly where children are involved, but could leave one party financially exposed in retirement. This can disproportionately affect women, making it important to consider future income and retirement needs alongside immediate housing requirements.”

Taking advice before making financial decisions

David said: “Anyone going through divorce should ensure asset valuations are up to date and seek legal and tax advice before agreeing a settlement. Proceedings can be lengthy, and changes in asset values or tax rules can affect the outcome. Once a settlement has been reached, a subsequent tax change will not necessarily provide grounds to revisit it.”

Catriona added: “As more people turn to AI tools to understand tax changes and explore their financial options, it is important to recognise their limitations. AI can provide a useful starting point, but it cannot replace advice tailored to a family’s individual financial position, objectives and long-term needs. Specialist advice can help families interpret the rules in the context of their own circumstances and make informed decisions about the future.”

Read more articles by Mills & Reeve.

About Mills & Reeve

Mills & Reeve LLP is a leading UK law firm headquartered in London, with additional offices in Birmingham, Cambridge, Leeds, Manchester, Norwich and Oxford. Its 1,450 plus people and over 850 lawyers share one vision – achieve more together. It’s a state of mind in every client relationship it starts and every choice it makes. And it’s what clients consistently say distinguishes it from your average law firm.

Ranked as the UK’s 39th largest law firm by 2023/24 revenues, Mills & Reeve is recognised for both legal excellence and a strong workplace culture, regularly featuring in The Sunday Times Best Places to Work and holding Platinum Investors in People accreditation. It’s driven by its values – “we’re ambitious,” “we’re open,” “we care” and “we collaborate”. It embraces new ideas, communicates honestly and is easy to work with. It’s committed to you, the planet, its communities and each other.

To find out more, visit www.mills-reeve.com/   

About Catriona Attride

Catriona is a trusted adviser (she is both a solicitor and chartered tax adviser) and helps individuals and families with high value and complex wealth planning and protection including:

• Preparing tax efficient wills and lifetime trusts
• Advising business owners on pre-sale exit planning, maximising valuable reliefs available
• Advising and establishing family investment companies
• Fulfilling philanthropic objectives through charitable trusts
• Providing personal tax advice with a particular focus on capital taxes

Catriona takes time to get to know her clients, understanding their concerns and aims for the short, medium and longer term and she develops proactive long term professional relationships. She often advises several generations of the same family, working to deliver long term strategies.

Many of Catriona’s clients are business owners and entrepreneurs who want to make appropriate wealth planning decisions at every stage of their business life cycle.

About David Hickmott

David is a specialist family lawyer who advises clients on the full range of family-law issues. David’s work includes divorce, financial remedy, complex children issues and nuptial agreements. David regularly acts for high and ultra-high net worth individuals and much of his work has an international element.

David has experience of complex jurisdiction and forum disputes in relation to both finance and children litigation. David has acted for clients in and assisted with mediations and arbitrations and is qualified to offer our Separate Well with One Lawyer service, allowing him to advise both parties to a dispute with a view to achieving an amicable and cost-effective resolution and implementing existing agreements.

David is listed as a “Key Lawyer” for the London Family Team in the Legal 500 directory.