IHT is a tax charged on the value of your estate (e.g. property, money and possessions) when you die, commonly referred to as inheritance tax.

The Autumn Budget 2024 announced several IHT changes that will have an impact on private individuals including business owners, farmers and trusts. We set out below a summary of the key announcement that could impact your personal finances and investments.     

• Nil Rate Band (NRB) and Residence Nil Rate Band (RNRB)

The NRB is an IHT free allowance available to all individuals on death and the RNRB is an additional IHT free allowance that is available to individuals who leave their home to lineal descendants on death.  

The current £325,000 NRB and £175,000 RNRB have both been frozen until 5 April 2030. The ability to transfer the reliefs between spouses / civil partners also remains unchanged.

• Lifetime Gifts

The rules regarding lifetime gifting, including the 7-year rule for lifetime gifts to fall outside an estate of IHT purposes and the exemption for gifts out of income, remain unchanged. This makes strategic gifting important to minimize inheritance tax liabilities.

• Pensions

Most unused pension funds and death benefits are to become subject to IHT from 6 April 2027, adding them to the inheritance tax considerations.

• Business Property Relief (BPR) and Agricultural Property Relief (APR)

BPR and APR are types of relief that can reduce the amount of IHT that is paid on agricultural and business assets held on death. For deaths from 6 April 2026:

• The current full 100% relief from IHT will be restricted to the first £1 million per individual of combined BPR or APR qualifying assets, with a 50% rate of relief (an effective tax rate of 20%) applying thereafter, with the IHT being able to be paid by instalments over 10 years interest free.
• The £1 million allowance is not transferable between spouses / civil partners as is the case with the NRB and RNRB. However, it does means that when combined with the NRB and RNRB a married couple / civil partners are able to leave business and / or a farm (including farmhouse) of a value up to £3 million to their child or children free of IHT.
• Investments not listed on markets of recognised stock exchanges, including the Alternative Investment Market (AIM), will no longer benefit from full relief with the 50% rate applying to the entire sum.

Trusts

The government will be publishing a technical consultation in early 2025 on how trusts holding APR or BPR assets will be impacted, although it has already been indicated there will be a £1 million allowance available to trustees. This consultation will address potential inheritance tax implications.

Capital Gains Tax (CGT)

In addition to the IHT announcements, the following changes to how CGT, which is a tax charged on the profits made when you sell or dispose of assets that have increased in value since they were acquired by you, should be noted:

• On the 30 October 2024 CGT increased to 18% for lower rate taxpayers and 24% for higher rate taxpayers.
• The CGT rates for residential property has remained at 18% for lower rate taxpayers and 24% for higher rate taxpayers.
• The CGT rate for Business Asset Disposal Relief and Investors Relief has increased to 14% for disposals made on or after 6 April 2025, and to 18% for disposals made on or after 6 April 2026.

If you would like to speak with one our solicitors dealing with Wills & Lifetime Planning, please contact our team on 01792 776 776.