IHT planning in 2026 – the power of SIPPs and SSASs
When people think about Inheritance Tax, their focus is often on property, savings, and investment portfolios. However, one of the lesser recognised planning tools available today may already be sitting within their pension arrangements.
For financial advisers and paraplanners, understanding how SIPPs and SSASs interact with estate planning has become increasingly important.
As many estate values continue to rise, pensions are no longer just retirement vehicles, they are becoming central components of intergenerational wealth planning.
Inheritance Tax is currently charged at 40% on the value of an estate above available allowances. Many clients are surprised to discover that decades of property appreciation, successful business ownership, and disciplined investing can create substantial tax liabilities for their beneficiaries.
Effective planning aims to ensure that more wealth reaches future generations and less is lost to unnecessary taxation. This is where pension planning can play a crucial role.
Unlike many personal assets, pension funds have historically sat outside an individual's estate for Inheritance Tax purposes. However, legislation has now been enacted so that, for deaths occurring on or after 6 April 2027, most unused pension funds and pension death benefits will be brought into the deceased's estate for IHT purposes.
HMRC has recently clarified areas of this new policy, giving greater visibility on the likely framework and areas of focus going forward. Although future changes may alter aspects of estate planning, what remains consistent is that pension structures such as SIPPs and SSAS arrangements are expected to continue playing an important role in effective intergenerational wealth planning, even as the wider regulatory landscape evolves.
The estate planning benefits of SIPPs
A SIPP provides investment flexibility alongside potential estate planning advantages, and for many clients it can:
- Hold a wide range of investments
- Facilitate long-term wealth accumulation
- Provide retirement income flexibility
This has led many advisers to view SIPPs as more than retirement products. They are increasingly considered family wealth planning vehicles.
When used appropriately, a SIPP can help preserve capital for future generations while supporting the client's retirement objectives.
How SSASs add another dimension
For business owners, a SSAS can introduce additional planning opportunities and for entrepreneurial clients, a SSAS can become a valuable bridge between retirement planning, business strategy, and estate planning.
A SSAS is often used by directors and family-owned businesses seeking greater control over pension investments and business-related assets. Potential advantages can include:
- Investment in commercial property
- Loan-back arrangements to sponsoring employers (subject to rules)
- Multi-member family participation
- Succession planning opportunities
- Potential Inheritance Tax efficiencies
As pension wealth continues to grow across the UK, SIPPs and SSASs are likely to play an increasingly important role in estate planning discussions.
Your clients are likely no longer simply asking: "Will I have enough to retire?". They are asking: "What happens to my wealth when I'm gone?"
Answering that question requires a joined-up approach that considers pensions, investments, property, business interests, and family objectives together.
Inheritance Tax planning is no longer a specialist conversation reserved for high-net-worth clients. For many families, pensions may represent one of the most valuable assets they own.
Understanding how SIPPs and SSASs fit into the wider estate planning picture can help advisers deliver more comprehensive advice, create better client outcomes, and support the efficient transfer of wealth across generations.
And as financial planning becomes increasingly complex, the firms that embrace smarter tools and clearer insights will be best positioned to lead the conversation.
This article is for information purposes only and does not constitute financial, tax, or legal advice. Pension and investment values can go down as well as up, and you may get back less than you originally invested. Tax treatment depends on your individual circumstances and may change in future. Pension benefits are usually not accessible until the Normal Minimum Pension Age, currently age 55, rising to 57 from 6 April 2028 (unless you have a protected pension age or are accessing benefits due to ill health).
