Preparation is key with the legislative changes coming in April 2027 for pension. In this article, Quilter offer a practical guide for paraplanners, helping to plan ahead with five key steps.
From April 2027, pensions will fall within the scope of inheritance tax (IHT). This is one of the biggest changes to retirement and estate planning in years. Paraplanners will play a key role in helping advisers reassess client strategies and prepare early so families aren’t caught by unexpected tax bills.
Below are five practical steps paraplanners can take now.
1. Strengthen the quality of client data
Accurate data is the foundation of good IHT planning. Review and update information on:
- total assets across all wrappers
- family structures and beneficiaries
- income needs
- existing estate plans
A complete picture helps paraplanners identify gaps, spot risks early and support advisers with better recommendations.
2. Segment and prioritise clients
Focus time where it matters most. Clients may be at risk of IHT even if they don’t consider themselves wealthy. Frozen allowances, high pension values and rising property prices all increase exposure.
Prioritise by age and planning status
Focus on older clients or those who haven’t yet established an estate plan. These individuals risk missing out on valuable allowances and facing unexpected tax bills.
Beware the loss of the RNRB
Clients who are eligible to use the residence nil‑rate band (RNRB), but have estates over £2 million, may lose some or all of this allowance. Losing the RNRB could cost a couple up to £140,000 in extra IHT.
Project forward, not just today’s position
Don’t just focus on today’s numbers. Project growth, inflation, and life expectancy to see who could drift into the IHT danger zone in future.
3. Use modelling tools to show the impact of IHT
Forward-looking analysis is essential but can be tricky to calculate. Tools like Quilter’s Pension Crystallisation Tool can help paraplanners:
- project client positions
- test different crystallisation decisions
- compare potential outcomes
- quantify the value of advice
Visual outputs make discussions clearer for advisers and clients and can help support early decision‑making.
4. Redefine advice strategies for high‑priority clients
For years, many clients drew income from ISAs and GIAs first and left pensions untouched. From April 2027, that approach may no longer be tax‑efficient. Paraplanners can help advisers explore alternative strategies, such as:
Move PCLS outside the estate
If a client doesn’t need their pension commencement lump sum (PCLS), consider gifting it into an IHT‑efficient trust.
Activate pension income
Turn on pension income earlier to help avoid double taxation on unused pension funds (when death occurs over age 75).
Spend, gift or insure
Review opportunities to make gifts (including gifts out of normal income) or use whole‑of‑life cover to meet expected liabilities.
Trust planning
IHT‑efficient trusts can remove assets from the estate after seven years. Options like Quilter’s Lifestyle Trust offer flexibility if clients may need future access.
5. Review platform capability
Our research* shows that one in four advisers intend to review their current platform, with the evolving tax environment prompting them to reassess the tools and features required to deliver financial advice. The features advisers considered crucial from their platform were:
- Flexible and reliable pension income (83% of advisers)
- Efficient movement between wrappers (78% of advisers)
- Integrated onshore bond (72% of advisers)
- A wide range of post-issue trusts (72% of advisers)
Quilter stands out as a true financial planning platform, offering the reliable features, integrated solutions, and adaptability needed to support paraplanners, advisers and clients through these significant changes.
Prepare now
This is arguably the most significant systemic shift in advice for decades. Acting now gives businesses time to prepare, and will prevent many families facing unnecessary tax bills
For further detail, paraplanners can download Quilter’s Pension IHT Guide or speak to their usual Quilter consultant.
