Private Client Update: Autumn Budget 2024 – A Snapshot
Samantha Turner, 31st October, 2024
Many people will be wondering how the recent budget affects them in terms of estate planning. Samantha Turner from our Wills & Probate team has put together this short note to provide you with a snapshot of the changes, how the changes may affect you and the considerations you may wish to make.
Inheritance Tax
The good news – Spouse exemption remains, all assets passed between husband and wife remain exempt. The tax-free nil rate band and residential nil rate band also remain (although they have been frozen until 2030). That means the amount you are entitled to pass tax free remains the same. For most married couples passing their estate to children this will mean the first £1,000,000 of your estate will be able to pass tax free to your children on second death (subject to certain requirements).
The bad news – Business Property Relief and Agricultural Property Relief has taken a major hit. Previously subject to qualification, business and agricultural assets would attract 100% relief meaning no inheritance tax was payable on these assets. The budget has announced that a combined allowance of £1,000,000 will be given and any surplus business and agricultural assets will be taxed at 20%. This change comes into effect from April 2026 so there is time to look at some lifetime planning.
Pensions
Unfortunately, bad news in terms of Pensions. From April 2027, unused pensions will be included within the value of your estate and subject to inheritance tax at a rate of 40%.
Capital Gains Tax
Whilst the personal allowances don’t appear to have changed, the rates of tax payable has!
Prior to the budget, capital gains on gains made on non-residential property was charged at 10% for lower rate taxpayers and 20% for higher rate taxpayers. This increased from October 30, 2024, and will now be 18% for lower rate taxpayers and 24% for higher rate taxpayers. The rates for Residential property remain the same at 18% for lower rate taxpayers and 24% for higher rate taxpayers.
So…What Next?
The implications of the recent budget will require a thorough review to consider how this impacts estate tax planning. Those with large pensions may now find themselves with an Inheritance Tax bill where before they did not. Those with businesses and farms will need to consider the implications of not being able to pass them down generations tax free.
We will provide a further update in due course but if you would like advice tailored to your circumstances, we recommend you speak with a member of our friendly team. For more information, see our Wills & Probate page, or call today on 01482 324252 for a no obligation chat.
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