Monthly Newsletter – September 2026

The Potential Impact of Inheritance Tax on Pensions from April 2027

From 6 April 2027, proposed changes could bring unused pension funds within the scope of inheritance tax (IHT). For some larger estates, this could result in a significant increase in tax payable when pension wealth is passed to the next generation.

NFU Mutual has highlighted an example where the combined impact of IHT, loss of the residence nil-rate band and income tax could result in an effective tax charge of 91.3% on a £700,000 pension.

IHT allowance
IHT is generally charged at 40% above the available allowances.

For a married couple, transferable allowances could potentially provide £1 million of combined allowances. However, the residence nil-rate band is reduced by £1 for every £2 that an estate exceeds £2 million and is completely lost at £2.7 million.

Example: £2 million estate plus £700,000 pension
Assume a married couple have £2 million of other assets and £700,000 in pensions, with the estate ultimately passing to their children.

Before 6 April 2027

Under the current rules, the pension would generally fall outside the IHT calculation.

The children could therefore potentially inherit:

Inheritance Amount Other assets after IHT £1,600,000 Pension £700,000 Total inherited wealth £2,300,000

If death occurred before age 75, the inherited pension could also potentially be received without income tax, subject to the relevant pension rules.

6 April 2027

Under the proposed changes, the £700,000 pension would generally be included in the IHT calculation, increasing the estate to £2.7 million.

This would also result in the complete loss of the £350,000 combined residence nil-rate band.

Calculation	Amount
Other assets	£2,000,000
Pension	£700,000
Total estate	£2,700,000
Combined nil-rate bands	£650,000
Residence nil-rate bands	£nil
Taxable estate	£2,050,000
IHT at 40%	£820,000

Comparison

	Before April 2027	From April 2027*
Estate for IHT purposes	£2,000,000	£2,700,000
Residence nil-rate band	£350,000	£nil
IHT bill	£400,000	£820,000
Increase in IHT	—	£420,000

The potential “triple tax” effect
If the pension member dies after age 75, beneficiaries may also face income tax when they draw the inherited pension. The withdrawals are added to their other taxable income and could therefore be taxed at higher or additional rates.

In the NFU Mutual example, additional income tax of approximately £219,326 is assumed.

NFU Mutual calculates that, after allowing for the IHT that would have applied to the non-pension assets anyway, the additional tax attributable to the £700,000 pension could be approximately £639,326.

Conclusion

If you are worried about the incoming IHT changes and would like to investigate mitigating actions that can be taken please contact the office and we can arrange an appointment to discuss further.

Darren Fuller – Clear Senior Paraplanner

Hot enough for you?

Warm out today/Another scorcher/My poor garden! Etc. etc……

The Met Office has got some brilliant stats to add colour to your conversations – this map on rainfall goes back to 1836 –  pick your location!

Source: metoffice.gov.uk

A few months ago, we were talking about the potential for a boom in air conditioning in the UK, and what it might mean for the grid/infrastructure if the UK becomes more like the US (90% of homes having aircon!). We were thinking about the next decade, but we should probably bring that timeline forward.

Source: Google Trends

As the heat this summer became so intense, you may well be one of those people still sweating it out waiting for the delivery of an air conditioning unit, ordered online weeks ago.

So what’s taking so long?!!

The answer leads us into the wonderful world of global supply chains – and recent data releases can help paint the picture.
China has exported $3.8 billion worth of air conditioners to the EU in 2026, a 44% increase on last year. According to Midea, (one of the world’s largest manufacturers) sales to the UK, Germany, France and Spain all increased by more than 70% in the first half of 2026. So, Chinese manufacturers are now running air-conditioner factories around the clock to keep up with the demand. Making the things isn’t the problem; moving them is!

In 2013 China launched what was known as “The New Silk Road” or the Belt and Road initiative. This was achieved by spending one trillion dollars in 150 countries, building and upgrading the railways, roads and logistics networks. This is based on the simple idea of controlling the delivery of the goods you are manufacturing.
This investment is paying off. The black lines on the map below show the China-Europe rail network as it looked in 2016.

The green lines are showing it today.

Source: China Railway/7IM

In 2016 there were 1,700 trains from China to Europe, last year there were more than 20,000!
An air conditioner shipped from China to Europe typically spends 40 days on a boat. By rail, it can get here in 15 days. But if that feels like an eternity in a heatwave, and, if 2027 is going to be hotter than this year as is being suggested, it is probably worth ordering now!

Source:7IM

Nearly two-thirds of the way through 2026 and it feels like a lot has happened.
And a quick scroll through the Wikipedia entry for 2026 kind of backs that up …

But if you hadn’t been able to read the headlines and just used market movements to set your emotional temperature, it’s been a different story.

We’ve pulled out a chart; Big Market Days (BMDs for short).
So instead of talking about “volatility” or “standard deviation” we can do some counting and look at the number of days where a market moves up or down by large amounts – more than 1% . It doesn’t matter if it’s up or down, it’s just about how bumpy the journey through the year is.
If you look at the S&P 500 in 2026, we’re tracking to be a little below average. 30 BMDs so far, vs. an average of 53 per year (since 1954). Still four months to go, but a smooth road so far.

Source: LSEG/7IM, 2026 data is to August 14^th, past performance is not a guide to future returns.

It’s the same story in the FTSE All-Share: 29 days so far in 2026, vs an average of 61 BMDs.
The one place it hasn’t been calm is in South Korea. The KOSPI 200 (Korean Composite Stock Price, FTSE equivalent) has already had 113 BMDs (since 1992 as that’s as far back as the data goes).

Source: LSEG/7IM, 2026 data is to August 14^th, past performance is not a guide to future returns.

But it is a lot worse than that. The KOSPI 200 has moved by more than 4% on 48 days this year. You could call them VVVBMD’s!! That’s a third of all trading days this year. To add context, the S&P 500 has had 28 “4%-er” days in the last 15 years!
The problem is simple. The KOSPI 200 is really the KOSPI TWO.
Source:7IM

AI Boom

When the current AI boom is compared to the 1990s dot-com bubble, there are still few signs of the macro imbalances that signaled the end of the dot-com boom. AI investment has accelerated over the past few months though and is now comparable to peak investment levels during the 1990s. Many investors believe that AI investment can continue to rise and fuel further equity upside, but markets can still be vulnerable to any news that challenges the optimistic assumptions about AI adoption and productivity gains, underscoring the case for diversification.

Marine Chokepoints

According to the Energy Information Administration, the world’s most important strategic chokepoints by volume of oil transit are the Strait of Hormuz and the Strait of Malacca. As shipping fees are being charged in the Strait of Hormuz, the energy market is worried about possible tolls in the Strait of Malacca which is the primary chokepoint in Asia and Oceania. The Strait accounts for 29% of total maritime oil flowing in the first half of 2025. The waterway is bounded by Indonesia, Singapore, Malaysia and Thailand.

Research by Rathbones (Telegraph) has highlighted the skewed tax nature in the country. Someone earning £150,000 a year will pay £53,000 in income tax, ten times more than the average worker despite only earning 3.8 times more than his £39,039. The figures show the country’s dependence on a relatively small pool of workers. The top 10% of income taxpayers contribute close to 60% of receipts, while the top 1% contribute 27% of the total. Between £100,000 and £125,140, the tax-free allowance disappears, such that the effective marginal tax is 62%. Increasingly, it is no longer paying to work.

Although The “Mag (Magnificent) 7”—Apple, NVIDIA, Microsoft, Amazon, Tesla, Alphabet, and Meta—account for 33.4% of the S&P 500 Index, in the first half of 2026, they were anything but magnificent. Three of the seven posted negative returns, collectively reducing the S&P 500 Index’s total return by nearly two percentage points. Microsoft was the biggest drag, falling 22.5% and shaving 1.4 percentage points off the Index by itself. In contrast, the other 493 companies contributed a combined 10.2 percentage points to the S&P 500 Index’s total return.

Interesting Financial Fact

The world’s first cash dispenser was installed in Enfield, North London, on 27^th June 1967 by Barclays Bank. Its inventor came up with the idea while sitting in the bath!