The UK government is considering changes to inheritance tax rules, including lifetime gifting and the seven-year rule. With a £20 billion gap in public finances, changes are expected in the Autumn Budget to address this issue. Pensions will face inheritance tax exposure starting in 2027. Changes announced in 2024 have already impacted pension pot taxation, aligning it with ISAs. The current 40% tax rate starts at £1 million for a married couple, but most estates do not pay this tax. Inheritance tax is paid on the total estate value, not individual assets like property. The freeze on the £325,000 allowance until 2030 is contributing to a rise in inheritance tax revenue, which has more than doubled in recent years. Less than 5% of estates end up paying inheritance tax.

Read more at Morningstar: What They Could Mean For Your Money