What does the 2025 Autumn Budget mean for inheritance tax, trusts and estate planning?
After months of speculation, the long-awaited 2025 Autumn Budget was delivered on 26th November. But what were the key announcements as far as inheritance tax (IHT), trusts and estate planning are concerned?
- The standard nil rate band (NRB) of £325,000 and the residential nil rate band (RNRB) of £175,000 will remain frozen until 6 April 2031. With asset values continuing to rise, more estates are likely to exceed these thresholds and become liable to inheritance tax. The NRB has been at the same level now since April 2009, and there continues to be no sign of an uplift.
- Several changes to Business Relief and Agricultural Relief were announced in 2024’s Autumn Budget and have caused significant uncertainty for many individuals and business owners. The welcome news announced on the 26th November is that the £1 million threshold will be transferable between spouses, providing for greater flexibility when looking at estate planning.
What should I do to protect my assets after the 2025 Autumn Budget announcement?
- Wills – Wills must be reviewed as soon as possible to ensure that they are drafted as tax efficiently as possible. Although the £1 million Business and Agricultural Relief threshold will be transferable between spouses, it continues to be important to consider the suitability of a Will Trust to protect business and agricultural assets. Not only would this preserve Business or Agricultural Relief on the first death, but it would also shelter future growth in value. This could be significantly important for the surviving spouse, particularly if the £1 million threshold remains frozen, much like the nil rate band has done for several years.
- Trusts – After the 2025 Autumn Budget, it is essential to review all existing trusts, especially those containing business or agricultural property. Careful thought will need to be given to existing trusts to assess their suitability going forward and consider the impact of the new rules on inheritance tax. It is also a perfect time to consider whether a new trust might be created in advance of April 2026 as part of wider succession plans.
- Outright gifts – With no changes to the seven-year gifting rule included in the 2025 Autumn Budget or on the horizon, it could be a great time to consider outright gifting and getting the seven-year clock ticking as soon as possible.
- Starting conversations – It can be hard to discuss succession planning with family, but it is a pivotal time to do so. Start having those open and honest conversations so that plans can be put into place now. Not only are huge changes on the horizon for Business and Agricultural property, but with pensions also coming into the inheritance tax regime from April 2027, it is more important than ever to plan for the worst.
With these latest 2025 Autumn Budget changes, as well as those announced previously (see our previous article for more info), it is more important than ever to plan ahead and consider your succession planning strategy and your inheritance tax planning. It’s not just about tax – it’s about ensuring that the homes, businesses, and farms that you have worked so hard for are able to stay in the family and pass down to future generations.
If you have any questions related to the 2025 Autumn Budget and its impact on your inheritance tax planning, then please get in touch with a member of our specialist team. Call us today on 01752 203500 or email me directly via emily.white@GAsolicitors.com.
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