On Wednesday 30^th October, the delivery of the Autumn Budget 2024 saw the Chancellor Rachel Reeves announce major tax changes, most notably in relation to Inheritance Tax and Capital Gains Tax.

The changes are set to impact many, from farmers and business owners to bereaved families. RDP solicitor, Sam Saysell, summarises the major announcements that should be considered in relation to planning the management and disposal of your estate.

Inheritance Tax (IHT)

Most estates do not pay IHT, with current figures suggesting that only 1 in 20 estates pay IHT.

These figures are largely because of charity/spouse exemptions applying or estates falling below the nil rate band, which is the amount a person can pass on to beneficiaries of their estate without being liable for IHT. Each individual currently has a tax-free allowance of £325,000, with an additional allowance of up to £175,000 also available if the requirements of the Residence Nil Rate Band are met. These allowances can also be transferrable in cases concerning surviving spouses, whilst any assets passing between spouses and civil partners benefit from an 100% relief inheritance tax.

The Chancellor has confirmed that the current freeze on these thresholds will remain in place for an additional two years from 2028, until 2030.

Business Property Relief (BPR) & Agricultural Property Relief (APR)

The Autumn Budget 2024 saw the announcement of substantial changes to Agricultural Property Relief and Business Property Relief, which currently offers vital relief from IHT for farmers and business owners.

Currently, an inheritance tax relief of up to 100% is available on qualifying business and agricultural assets that form part of an estate. However, from 6^th April 2026, these reliefs will be capped at a 100% relief for the first £1million of combined business and agricultural assets. A 50% relief will then apply instead for anything above the £1 million threshold and the remaining 50% will be taxed at 40%.

Additionally, from 6^{th of} April 2026, the rate of business property relief available will be reduced from the current 100% relief to a 50% relief in cases of shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Stock Market (AIM).

Pensions

Most pensions are currently exempt from IHT and are not deemed part of an individual’s estate for IHT purposes when they die.

However, this position will change significantly from 6^th April 2027, when most unused pension funds and death benefits will instead be deemed to form part of an individual’s estate when they die for IHT purposes. There is no doubt that this substantial change will mean that a significant number of estates that were previously exempt from IHT will now become taxable.

The changes also outline that pension scheme administrators themselves will be responsible for calculating, reporting, and paying any Inheritance Tax due on pensions to HMRC directly.

Capital Gains Tax (CGT)

An instant increase (from 30^th October) was announced in relation to CGT, the tax imposed on gains from the disposal of properties or investments. The lower rate of CGT has risen from 10% to 18%, whilst the higher rate has risen from 20% to 24%.

However, CGT rates on estate and trust assets  have remained unchanged at 20% and 28% respectively, whilst the rates on residential property also remain unchanged. Main residential properties will remain exempt from CGT due to Private Residence Relief.

There will also be changes to Business Asset Disposal Relief and Investors’ Relief, with the rates increasing gradually from  the current 10% to 14% in April 2025 and to 18% by April 2026.

If you would like to discuss how these changes may affect you or your family, please do not hesitate to contact a member of our team for advice.

At RDP Law, we offer a quality and compassionate service. You will be allocated a dedicated lawyer who will expertly guide you through your estate planning following the Autumn Budget.