What 2025’s rule changes mean for the future of advice

Inheritance tax and pensions: a complex turn

One of the most frustrating developments has been the inclusion of unused pensions in inheritance tax calculations. For a decade, pension benefits on death were treated generously, so a shift was expected.

What wasn’t expected was the convoluted process now emerging. Families will face an administrative nightmare at a time of grief with personal representatives now required to calculate the tax due and organise payment within six months. The industry proposed simpler alternatives that would have raised the same tax revenue, but these were dismissed out of hand.

Targeted support: a step in the right direction

Not everything was negative. The FCA worked constructively with the industry to develop targeted support for those who don’t receive regulated advice. This new regime aims to bridge the gap between advice and guidance.

Final rules are expected in December, with rollout planned for April. It’s a positive development and credit is due to the FCA for listening and collaborating.

ISAs: more rules, less clarity

The Government entered office promising to simplify ISAs and encourage investment. Instead, the latest Budget reduced the cash ISA allowance to £12,000 – a move that will create 12 different sets of ISA rules.

AJ Bell’s research showed that a single ISA would drive more people to invest rather than save in cash. Sadly, that evidence was ignored, and advisers now face even more complexity.

Pension schemes bill: big changes ahead

The pension schemes bill has been trudging through Parliament and will reshape workplace pensions. We’re moving from a landscape of multiple single trust schemes to a handful of master trusts.

Will this be positive? It’s too early to say. My concern is that we end up with beige solutions that benchmark each other and that Government powers to direct investment decisions could extend beyond workplace pensions.

Next steps for your advice

• Update estate planning strategies to reflect new inheritance tax rules on pensions.
• Once known, communicate ISA changes clearly to clients.
• Monitor pension scheme consolidation and assess potential impacts on workplace pension recommendations.