Autumn Budget 2024 – Key Updates on Inheritance Tax and more
The Autumn Budget 2024 has introduced notable changes to the UK’s Inheritance Tax (IHT) framework. After closely following the announcements in Parliament and subsequent analysis by financial experts, here is an overview of the updates as we understand them so far. Further clarity is expected as the detailed legislation is released.
Nil-Rate Bands Remain Unchanged
The nil-rate band, which determines the portion of an estate exempt from IHT, along with the residence nil-rate band (for properties passed to direct descendants), will remain frozen at their current thresholds until 2030—an extension of two additional years. As inflation impacts on the value of the nil-rate band, more and more clients are going to see this diminish the value of their tax-free estate.
Changes to Pensions and IHT
Starting in April 2027, pension assets will be included in the valuation of an estate for IHT purposes. This marks a significant shift in how estates will be assessed.
Adjustment to Business Relief for AIM Shares
Investors in Alternative Investment Market (AIM) shares and similar assets will see a reduction in Business Property Relief (BPR). From now on, qualifying assets will attract only 50% relief instead of the previous 100%.
Modifications to Relief on Business and Agricultural Assets
From April 2026, the rules for relief on business and agricultural assets will change. While the first £1 million of qualifying combined assets will continue to benefit from 100% IHT relief, any value exceeding this amount will qualify for just 50% relief. Questions remain about how this will affect lifetime gifting and whether adjustments in gifting strategies might be required to manage IHT exposure effectively. We have already seen in the last month the upset and protests from the farming community to this announcement.
End of the Non-Domicile Tax Status
The non-domicile (non-dom) tax regime is set to be abolished in April 2025. It will be replaced with a residence-based tax scheme designed to incentivize temporary investment in the UK.
Our expert Private Client team lead by Partners Katrina Greenwell and Guy Birtwistle are monitoring these developments closely to ensure we can provide accurate, tailored advice as the legislative details emerge. If you’re looking to explore estate planning or need guidance on how these changes might affect your situation, please don’t hesitate to reach out to us.
If investment advice or accountants advice are needed then we have a number of trusted advisors who we can recommend to you.
