Jade Lim arrived in the United Kingdom from Singapore with a mere £60 in her pocket. Through decades of careful budgeting, thrift, and personal sacrifice, she managed to build a modest nest egg for herself and her family. However, her world was turned upside down when she received a devastating diagnosis of terminal lung cancer. Her immediate concern wasn’t her own health, but the financial well-being of her daughters and the looming spectre of inheritance tax (IHT) during their time of grief.
Jade, a resident of Derbyshire with two daughters, aged 37 and 33, and three grandchildren, expressed her profound anxiety to The i Paper. “Instead of focusing on my health and making the most of the time I have left, I find myself consumed by anxiety about IHT, the so-called death tax,” she shared. “It is a cruel levy, imposed at a time when families are trying to cope with grief and loss.”
Her fears are particularly acute for her eldest daughter. “I worry deeply about my eldest daughter having to navigate the complexities of probate while mourning,” Jade explained. “I worry about my daughters being forced to sell assets quickly to meet a tax bill that needs to be paid within six months, after which interest will be charged.” She highlighted the significant burden this would place on her daughters, who have young children, demanding careers, and no prior experience in managing property sales or complex estate administration. “The pressure on them will be immense,” she stated.
A Life-Altering Diagnosis
The diagnosis of lung cancer came as a shock two and a half years ago. Jade had been experiencing a persistent cough for over six months, initially dismissing it as an allergy. However, its persistence prompted her to consult her GP. “The GP must have suspected something as he referred me for an X-ray straight away,” she recalled. The subsequent tests, including a biopsy, confirmed Stage 4 lung cancer, a diagnosis considered terminal as the cancer had spread to other organs.
While Stage 4 cancer is not curable, modern treatments can significantly extend life expectancy. Jade was initially given a prognosis of two to nine months without treatment. Fortunately, targeted chemotherapy has been effective in managing her condition so far, allowing her to live beyond her initial prognosis.
Shifting Priorities: From Health to Inheritance
Despite the gravity of her diagnosis, Jade adopted a stoic approach. Her primary concern shifted from her own health to the welfare of her daughters. “I realise that life comes to an end for everybody, so I was quite accepting of the diagnosis,” she said. “But my daughters were very upset.”
The unexpected notice of her condition, however, allowed her to plan her affairs. It was during this planning that she discovered the significant impact of IHT, which caused her considerable distress. “I was more upset about the tax than I was about my diagnosis,” she admitted.
The Impact of IHT Reforms
Jade believes that inheritance tax is both unfair and cruel. Her anxieties were amplified by the recent announcement that pension savings will be included in IHT calculations from April 6, 2027. If she lives past this date, her entire pension pot, accumulated through years of diligent saving, will be subject to a 40% IHT charge.
She expressed frustration at the common assertion that only the wealthiest 4% of families pay IHT, a label she vehemently rejects. “I have been working my whole life, but my salary has never been more than £20,000 and I have never been a high earner,” she stated.
A Journey of Hard Work and Saving
Jade’s journey to financial stability began when she moved to the UK from Singapore in 1986. She found employment and diligently saved, eventually purchasing a small flat in Cheltenham while pursuing a Master’s degree. Her dedication extended to multiple jobs, including teaching Mandarin at a weekend school, working at a college, and assisting at a homework club. After completing her studies, she began renting out her Cheltenham flat, which has since become a cornerstone of her investments and continues to provide her with rental income.
Having been divorced for over 15 years, Jade’s IHT allowance as a single individual is considerably lower than that of a married couple.
Understanding the Tax Thresholds
Currently, the IHT nil-rate band, the threshold below which no IHT is payable, is fixed at £325,000 per person until April 2028. An additional residence nil-rate band of £175,000 applies if a home is being passed on to direct descendants. This means Jade’s estate has a potential allowance of £500,000 before IHT is applied.
Jade owns a two-bedroom bungalow in Derbyshire, valued at approximately £350,000, which she purchased mortgage-free after living in London previously. Her one-bedroom flat in Cheltenham is valued at around £150,000. Combined, these properties bring her estate to the inheritance tax allowance.
She also has savings of approximately £50,000. Jade had believed her estate would only slightly exceed the threshold, and importantly, that her pension would be protected. However, the upcoming changes mean that if she survives past April 2027, her £170,000 personal pension pot, built up over 30 years, will be subject to a 40% IHT charge.
The Emotional Toll of IHT
The prospect of a substantial portion of her hard-earned savings being taken by the government and complicating her daughters’ grieving process is deeply upsetting for Jade. “It is just so upsetting,” she said. “That is my hard earned money that I worked including evenings and weekends to get.”
Her primary wish is for her money to benefit her children. “But now the Government is going to take a big chunk of it away and in the process, my daughters will have to go through the difficult procedure during a period of mourning,” she lamented. She understands the challenges of managing someone else’s financial affairs, especially during a time of loss. “It is like a tax on me, but I won’t be able to help them,” she explained. “If I could handle it myself, that would be better, but the thought of my loved ones having to go through this after I am gone upsets me.”
Jade believes her family needs the money, especially in today’s economic climate. She is concerned about it going to the government, which she perceives as “wasting money on things so senselessly.”
Awaiting State Pension and Current Income
At 65, Jade is still two years away from being eligible for her state pension and fears she may not live long enough to claim it. Her current income consists of a small teaching pension of around £200 per month from her college work, rental income from her Cheltenham flat, and withdrawals from her personal pension.
A Call for Reform
Jade feels that the proposed inclusion of personal pensions in IHT calculations unfairly penalises individuals who, like her, have diligently saved for retirement without the benefit of generous employer pension schemes. “Apart from being cruel, IHT is unjust as it taxes assets that have already been taxed throughout the deceased’s lifetime of working and saving,” she argued.
She strongly advocates for meaningful reform, or even outright abolition, of IHT, allowing families to focus on what truly matters during the end of life.
Despite her terminal diagnosis, Jade is determined to make the most of her remaining time. “Even though I know my condition is terminal, at least I can try to plan my affairs and try to go through my bucket list and make memories with my family,” she concluded.
