How the Autumn 2024 Budget impacts your estate planning: 5 Key Takeaways

The UK’s Autumn 2024 Budget introduces several notable changes over the course of the next 6 years, affecting estate planning, particularly with respect to wills and probate. If you’re preparing for your family’s financial future, it’s essential to understand these updates and how they may influence your current estate and impact on death. Here are the five main takeaways from the latest budget, along with steps you can take to ensure your will and estate plan remain aligned with current regulations.

1. Inheritance Tax (IHT) Adjustments

The freeze on the inheritance tax threshold has been extended by two years to 2030. This means the first ￡325,000 of an estate remains tax-free, increasing to ￡500,000 if a residence is passed to direct descendants. When the allowances of a couple who are married or in a civil partnership are combined then up to ￡1 million can be transferred when the second person dies.

A significant new change is the inclusion of inherited pensions within inheritance tax, starting April 2027.

What You Can Do: Reviewing what makes up your estate for inheritance tax with one of our advisors is crucial to make the most of available reliefs and to consider gifting strategies that can help reduce the taxable value of your estate before these changes take effect.

2. Agricultural and Business Reliefs

Starting in April 2026, the first ￡1 million of combined agricultural and business assets will be exempt from inheritance tax. For assets exceeding ￡1 million, the tax rate for these assets will be 20%. ?This change particularly impacts heirs of agricultural or business assets, who may now face higher IHT obligations than previously. Holdings in an AIM portfolio which had attracted full relief will now be subject to 20% charge for IHT.

What You Can Do: It’s essential for estate owners to consult with an advisor to assess how these changes affect their holdings and to explore strategies for maximising reliefs within the new rules.

3. Capital Gains Tax (CGT)

From April 2025 for higher rate tax payers, on assets such as shares this will go up from 20% to 24%, for lower rate tax payers, it will rise from 10% to 18%. On residential property, the rates will remain at 24% and 18%.?

What You Can Do: If you have appreciated assets, consider a portfolio review with your investment or financial advisor, to secure gains at the current CGT rate.

4. Higher Rate of Stamp Duty Land Tax (SDLT)

The higher rates for additional dwellings of Stamp Duty Land Tax have risen from 3% to 5% from 31st October 2024. These higher rates apply to purchases of second homes, buy-to-let residential properties and companies purchasing residential property.?Those who exchanged contracts on or before 30th October 2024 are not affected by this rate increase.

5. Carer’s Allowance

Carers will now be able to earn more, up to ￡10,000 annually (equivalent to 16 hours per week at the National Living Wage), while still receiving Carer’s Allowance. This benefit currently provides up to ￡81.90 per week to eligible individuals with caregiving responsibilities, allowing carers more flexibility to increase work hours if they choose.

Take Control of Your Estate Planning

The Autumn 2024 Budget highlights the importance of proactive estate planning. With potential increases in inheritance tax reach and impacts on probate, taking steps now can make a significant difference for you and your family. Staying informed and actively managing your estate plan will help you take advantage of available reliefs and exemptions and protect your assets amid shifting tax regulations.

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Email: [email protected] Telephone: 01844 212 305 Visit our Wills and Probate page