How will the Autumn 2024 Budget affect your taxes?

Chancellor Rachel Reeves confirmed changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT) in the budget as part of her tax rise package, which aims to raise £40bn.

What is Inheritance Tax?

IHT is a charge applied to an individual’s estate after death. It is important to note that anything left to a spouse or civil partner is not subject to IHT, regardless of the estate’s value. This IHT exemption does not extend to couples who are not married or in a civil partnership.

Everyone has a £325,000 inheritance tax-free allowance. Therefore, if you are an individual who is not married or in a civil partnership and your estate falls below that threshold, you will not be paying any IHT. If you are married or in a civil partnership, then any unused allowance can be claimed on the death of the second to die. Therefore, on the second death, the estate could benefit from a £650,000 tax-free allowance. There are also additional allowances that may be available to claim, thereby increasing the amount you can leave tax-free. If your estate exceeds the allowances available to you, the remaining balance will be taxed at 40%.

If you would like further information surrounding this and your specific situation, please contact us.

So, what changes are coming?

Individual IHT allowances

These were due to remain frozen at £325,000 until 2028; however, this has been extended to 2030.

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

APR and BPR will change from April 2026. These changes include the following:

• only the first £1million of qualifying assets will benefit from 100% tax relief
• any qualifying assets exceeding that £1million threshold will get 50% tax relief
• any unused APR and BPR reliefs from the first death will no longer be transferable between spouses and civil partners
• the scope of BPR will be amended, meaning that any shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as Alternative Investment Market (AIM) shares, will receive a reduced rate of BPR at 50%.

If you believe your estate would benefit from APR and BPR and you are concerned about these changes, please contact us.

Pensions

Currently, pensions can be passed free of IHT on death. However, from 6 April 2027, any unused pension funds and death benefits payable on the death of an individual will fall into their estate for IHT purposes. As such, the value will be considered when calculating the value of the estate and the IHT payable.

Capital Gains Tax

CGT has increased with immediate effect to 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. CGT on residential property, however, remains unchanged.

Contact our Wills and Estate Planning solicitors today

Please contact one of our skilled and empathetic team today for a chat and guidance on your specific circumstances to enable us to tailor our advice to you. We can help you as and when you need and guide you along the way. Otherwise, we can deal with every aspect of estate planning and administration from start to finish, taking the burden away from you. This also means you have the peace of mind that everything is done correctly and efficiently.

Please contact our specialist Wills and Estate Planning team by using our online enquiry form or by calling 0330 404 0768.