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Please contact us for advice in your own specific circumstances. We’re here to help! November 2026
· £1.28bn inheritance tax saved by leaving money to charity
· HMRC signs deal to modernise its data systems to help tackle evasion and fraud
· Estate valuation mistake leads to large IHT bill
· Owners of second homes pushed into debt after tax change
· November Questions and Answers
· November Key Dates
Families saved an estimated £1.28bn in inheritance tax (IHT) by leaving money to charity through their wills. This represents an 88% increase over the past six years. Gifts to charities are exempt from inheritance tax, making them an increasingly popular estate-planning tool. Assets left to charity are not subject to IHT. If at least 10% of the net taxable estate is left to charity, the IHT rate on the remaining taxable estate falls from 40% to 36%. For 2025-26, around £1.22bn of tax was saved through charitable gifts and charitable trusts, plus a further £55m through the reduced 36% tax rate.
Currently around 4-5% of estates pay inheritance tax. This could rise to about 7% when unused pension funds become subject to IHT from April 2027. Legal and financial advisers suggest people review both their wills and pension nominations in light of these changes. A relatively small increase in a charitable gift can sometimes leave both the charity and the family better off.
With this rise in donations, there also comes the warning about fake charity will-writing schemes. Scammers pretend to be from a charity and offer a free or discounted will-writing service with the aim to pressure you into leaving money to their fake charity, steal your personal and financial details, or charge hidden fees. Sometimes the “charity” doesn’t exist at all, or the will they create isn’t legally valid. It is recommended to use regulated solicitors or reputable will-writing providers.
HMRC has signed a £175 million, 10-year agreement with Quantexa, a London-based technology company in what is described as one of the largest public-sector technology deployments.HMRC wants to replace its fragmented legacy data systems, which currently make it harder to identify tax evasion, fraud, and unpaid taxes. Tax evasion is estimated at £5.5bn with a further £47bn in taxes going unpaid last year.
Quantexa will create a unified data foundation that brings together information from different sources, helping HMRC identify complex networks involving shell companies, directors, VAT fraud, and payroll fraud. This deal aligns with the Treasury’s effort to “Close the Tax Gap” and reflects a move towards using domestic technology to strengthen national infrastructure and combat increasingly sophisticated fraud. The government’s view is that better-connected, higher-quality data will enable both more effective enforcement and future AI-driven tax compliance tools.
Justine Fernandes ended up paying around £8k too much in inheritance tax after she and her brother significantly overestimated the value of their late mother’s possessions when dealing with her estate.They estimated that antique furniture, jewellery, clothes and other belongings were worth about £20k. Based on that estimate, they paid roughly £8k in inheritance tax. Concerned they might have undervalued the items, Justine later obtained a professional valuation while probate was still ongoing. The professional assessment found the possessions were actually worth only about £1.5k to £2.5k – far below the family’s estimate. By the time the true value was known, the tax had already been paid, leaving Justine shocked at the size of the overvaluation.
This case highlights the risk of relying on informal estimates when valuing estate contents for inheritance tax purposes. Obtaining a professional valuation early in the probate process can help avoid costly mistakes. This is especially relevant for estates containing antiques, jewellery or other items whose market value may differ significantly from sentimental value.
Hundreds of second home and holiday-let owners in Pembrokeshire, Wales have accumulated large council tax debts following changes to Welsh rules on holiday accommodation.
Since 2023, owners must demonstrate that their holiday let was occupied for 182 days a year to qualify for business rates. Previously, only 70 nights of bookings were required. Those who fail to meet the threshold become liable for council tax instead. The Welsh Government allowed councils to backdate the new requirements, resulting in some owners receiving retrospective council tax bills covering several years. According to council figures: 3,086 owners owed between £1k and £10k, 230 owed £10k to £20k, and 78 owed more than £20k.
There is a significant backlog of appeals with the Valuation Office Agency (VOA) from owners challenging their move from business rates to council tax. Around £2.9m of council tax arrears is linked to self-catering properties under appeal. The council leadership expressed sympathy but argued that owners had been aware of the policy changes for some time and should have known whether they met the occupancy threshold.
A proposal to ease pressure on affected owners has been postponed while the Welsh Government reviews the policy. One option being considered is reducing the letting requirement from 182 days to 154 days and providing exemptions for some small-scale holiday-let operators.
A: Most savers can earn some interest tax-free through the Personal Savings Allowance (PSA). Basic-rate taxpayers get up to £1,000 of savings interest tax-free, higher-rate taxpayers get up to £500 tax-free, and additional-rate taxpayers get no PSA. The tax rates on savings interest are increasing to 22% (basic rate) and 42% (higher rate) from April 2027 so it is good that you are thinking about managing your savings more tax efficiently.
If your annual income is below £17,570 then you could qualify for the “starting rate for savings”. This gives you up to £5,000 of tax-free savings interest. If you earn less than £12,570 (the Personal Allowance), you get the full £5,000. It reduces, pound for pound, when you earn above the allowance, reducing to zero once you earn £17,570.
You should check that you are using all of your ISA allowance (£20,000), as ISA savings interest is exempt from tax. You can hold a maximum of £50,000 in Premium Bonds, where the “prizes” are tax-free. Most can delay tax payment by contributing into their private pension. The growth of the pension fund’s investments is not taxed, just the withdrawals you make from it, and you can normally take up to 25% (capped at a lump sum allowance of £268,275) tax-free.
A: There are two options available. The main differences between them are the timing and structure of the tax-free cash withdrawal. There is the flexi-access drawdown (FAD), and the uncrystallised funds pension lump sum (UFPLS).
Using the FAD approach, you can take up to 25% of your pension pot tax-free (up to the lump sum allowance cap of £268,275). This is known as your pension commencement lump sum (PCLS). The balance goes into a drawdown fund, meaning it is crystallised and all future withdrawals will be taxed at your marginal rate.
The UFPLS method sees you take lump sums from your uncrystallised pension pot where each payment is 25% tax-free and 75% taxed at your marginal rate. The balance remains uncrystallised.
The UFPLS option triggers the Money Purchase Annual Allowance (MPAA), reducing what you can pay into your defined contribution pension annually to £10,000. If you only take your PCLS and don’t start drawing down income as well under the FAD method, the MPAA is not triggered. It will be once you start taking an income.
Which option is best for you depends on several factors.
A: There are several policy types you can take out to help cover your IHT bill. A “term life” policy will pay out if you die during the term specified and can be used by your beneficiaries to put towards the IHT bill.
A “whole of life” policy will pay out whenever you die (as long as the policy is still active) but can be expensive and is not widely available.
Then there is the “gift inter vivo” policy which is designed to cover the IHT bill related to a (usually large and exceeding your IHT allowance) gift, should you die within seven years of it being given.
1st
– Corporation Tax payments are due for companies with a year-end of 31st January.
19th
– For employers operating PAYE, this is the deadline to send an Employer Payment Summary (EPS) to claim any reduction on what you’ll owe HMRC.
– It is also the deadline for employers operating PAYE to pay HMRC by post, for October.
22nd
– Deadline for employers operating PAYE to pay HMRC electronically, for October.
3oth
– Corporation Tax Returns (CT600 form) are due for companies with a year-end of 30th November.
Disclaimer
The information contained in this newsletter is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.
