Inheritance tax advice following the 2024 budget.
As predicted, the Labour Government’s Autumn Budget introduced a number of significant reforms to inheritance tax (IHT). The changes are likely to increase IHT liabilities in estates with property, pensions, agricultural assets and certain types of business interests.
The reforms can be summarised as follows:
Freezing the Nil Rate Band (NRB)
The NRB, which has been frozen at £325,000 since 2009, will remain unchanged until April 2030. As property prices increase, the freeze means a greater proportion of estates will be subject to IHT.
Bringing Pensions into the Scope of IHT
Currently, it is possible to pass on pension savings to beneficiaries free of IHT. From April 2027, inherited pensions and death benefits will form part of a person’s estate for IHT purposes. This is a substantial reform that could push many estates above the IHT threshold.
Changes to Agricultural Property Relief (APR) and Business Property Relief (BPR)
At present, 100% APR and BPR is available on qualifying agricultural and business assets. As of April 2026, estates will receive 100% relief on the first £1 million of combined agricultural and business property but only 50% relief thereafter. With many farms and family businesses having limited cash flow, the reduction in IHT reliefs could create financial difficulties for owners or force a sale of assets to pay the tax.
Despite speculation, there has been no announcement about changes to the seven-year gifting rule. This means that lifetime gifts will not be subject to IHT providing the donor survives for seven years from the date of the gift.
How we can help you
You may benefit from seeking inheritance tax advice advice following the 2024 budget to ensure that your arrangements are still as tax efficient as possible. Our Wills, Trusts and Probate team will be happy to review your Will and lifetime planning and make recommendations on any changes that should be made.
