For our February Protection Forum part one, we brought together advisers and insurers to discuss:
‘The impact of The Budget on Protection & IHT’
The session focused on the impact of the recent UK Budget on protection insurance and inheritance tax (IHT). Industry experts discussed key changes, including the rise in National Insurance contributions, how death in service benefits may now be subject to IHT, and potential solutions such as relevant life policies. The conversation also covered the role of whole of life insurance in IHT planning, the growing need for advisers to work with tax specialists, and the regulatory considerations when offering trust and tax advice. The session provided valuable insights for financial advisers navigating these changes, ensuring clients remain protected while optimising tax efficiency.
See the session highlights below, and listen to the full audio:
“Employers are seeing National Insurance costs go up by approximately 2%… there’s speculation they might look at reducing pension contributions as a way to offset this.”
“We know that death in service lump sums could get caught by the new IHT regulations, impacting schemes that provide high multiples of salary as a lump sum rather than a spouse’s pension.”
“Relevant life policies could be a key solution here—since they are not pension arrangements, they are expected to remain outside the new IHT rules.”
“There’s a huge opportunity for whole of life policies given the IHT changes. Some networks are already allowing their advisers to start recommending whole of life to cover potential IHT liabilities on pensions.”
“Farmers and business owners will see significant IHT liabilities under the budget changes—with only £1M of business and agricultural assets receiving full relief, larger estates could face substantial tax bills.”
“Given the 10-year instalment payment option for IHT on agricultural land, farmers may prefer a whole of life policy instead, spreading the cost rather than facing large tax instalments.”
Click the audio playback below to listen to the full session.
Full session audio
Part 2:
“L&G added a question in their application for all life and CI policies: ‘Is this inheritance tax planned?’—if yes, the policy can’t proceed without a completed trust. It’s a signpost for advisers to be cautious about straying into IHT advice without the proper permissions.”
“It’s not just about firm permissions—individual advisers also need the right qualifications, such as a diploma in regulated financial planning, to be able to offer IHT advice.”
“We’ve seen some good insurer-led initiatives, like decision trees and customer-facing websites, that help clients understand trusts without requiring an adviser to step into regulated tax advice.”
“With Consumer Duty in mind, advisers should be thinking about professional partnerships. If they can’t provide IHT advice themselves, they should have a clear referral pathway to a specialist who can.”
