Navigating Autumn’s Uncertainties: Inheritance Tax & Your Wealth

September 2025

Welcome to the September edition of the Later Life Property Finance Ltd blog.

This month, we explore the financial implications of upcoming inheritance tax changes affecting pensions and property, and what this might mean for more families in the years ahead. We also share some light-hearted reflections on the end of summer and fun facts about September - perfect for readers aged 55 and over who appreciate clear, practical insights without the jargon.

Changing Seasons, Changing Rules

September has arrived, when the last BBQ sausages are gone, and it’s not clear if we should be wearing shorts or a raincoat! It’s nature’s way of saying, “don’t get too comfortable.” This year, it feels like finances are following suit, with new inheritance tax (IHT) changes set to shake things up.

How IHT Changes May Affect Pensions and Property

The government plans to include most unused pension funds in your estate for inheritance tax from April 2027. If your overall assets, including your home and any untouched pension pots are above £325,000 (or £1m with residence and spouse allowances), your loved ones could face a 40% tax bill on what’s left behind. The rules still exempt pensions that go to a spouse or charity, but if your beneficiaries are children or others, more families may see higher tax charges and extra paperwork.

If your pension is large, the new regime could mean more of your money goes to the taxman, not your family. Tax could be double-dipped, first as inheritance tax, then as income tax when benefits are drawn, potentially reaching a combined hit of up to 67%.

What Can You Do Now?

• Keep nominations up to date: Make sure your pension provider knows who should benefit, this can speed up payments and may avoid unnecessary complications.

  
  

• Withdraw or spend strategically: Drawing down some pension during your lifetime could reduce future tax bills - but always consider how much you’ll need to live on and any income tax that applies.

  
  

• Consider equity release: Unlocking cash from your home lets you use money now - whether to gift to family, help grandchildren buy a home, spend on yourself, or cover care costs. Any funds you spend or gift (and live seven years after) may not count towards your estate for IHT, reducing the tax bill for those left behind.

  
  

• Use allowances and planning: Marital and residence nil-rate bands, charitable gifts, and trusts may help mitigate tax.

  
  

• Seek professional advice: The new rules are complex, and what works for one person may not fit another. Talk to a qualified adviser for carefully tailored options that fit your situation and future needs.

Why Not Just Enjoy It?

Equity release, for example, can provide flexibility. Imagine using some mortgage funds for a dream trip, giving an early inheritance, or just putting a smile on a loved one's face.

Every pound used or given is one less pound for HMRC - subject of course to the seven-year gifting rule.

But remember, equity release does mean less for your estate and heirs overall, and it’s vital to weigh up your options before making decisions.

September Surprises

• September's named after the number seven, but it's actually the ninth month!

• The Harvest Moon graces our skies this month.

• National Grandparents Day, National Cheese Pizza Day, and the famous Great Fire of London all fall in September.

  
  

Still undecided on the umbrella or jumper? You’re not alone - September ends with autumn’s classic unpredictability.

One Last Laugh…

“Summer’s gone, the garden has surrendered, and the only thing still growing is my list of reasons to stay indoors!”

As rules shift and the nights draw in, don’t get caught out by autumn’s surprises. Your money, legacy, and peace of mind deserve careful planning - if you’re unsure how these changes might affect you, talk to an expert before winter sets in!

Have a topic you would like us to cover next month? Let us know and do not forget to share your favourite joke from this month's blog!

If you have any questions about later life mortgages or just want to share your best picnic story, we would love to hear from you.

The team at Later Life Property Finance Limited

An equity release mortgage may not be the best option for everyone. It is vital to consider other financial alternatives and consult a professional adviser to ensure it meets your needs and circumstances.