What Financial Advisers Need to Know About the Upcoming Budget and Inheritance Tax Planning

With the Autumn Budget announcement on the horizon, financial advisers have a key opportunity to refresh inheritance tax (IHT) and wealth transfer strategies for their clients.? ? Expected policy shifts could reshape wealth transfer approaches, especially for clients with significant estates and valuable assets. Here’s what advisers should consider in anticipation of potential changes?

1. Potential IHT Changes: Rates, Thresholds, Exemptions and Reliefs?

According to a recent survey by abrdn , 23% of advisers view prospective changes to current inheritance tax thresholds, allowable exemptions or reliefs as the most significant of the changes being discussed as possibilities in the upcoming budget.?

Areas where change has been mooted include the residence nil rate band allowance, and business property relief. This could significantly impact investment strategies, for example, if a BPR reduction meant that AIM investments became a less effective inheritance tax mitigation.? ?

Overall estate planning exposures and opportunities could markedly change if taxable thresholds or allowances are altered. Advisers should prepare to help clients navigate any possible freezes, reductions, or inflation-related adjustments, which could require strategic updates to estate plans. ?The budget represents a perfect opportunity to engage with clients to re-examine the appropriateness of their holistic estate plan in the light of any changes to IHT policy.?

2. Increasing Importance of Gifting and Reliefs?

Current discussions around capital gains tax and exemptions for gifts suggest that potential reforms in this area might be announced in the upcoming budget. Advisers should stay updated on the rules around potentially exempt transfers (the gifts that can be made free of IHT if survived by seven years), the small gifts allowance, and rules surrounding gifting out of regular income. Any changes could either expand or limit gifting strategies and potentially alter clients' wealth transfer plans.?

By preparing early and clearly signposting options, advisers can help clients maximise their available allowances and develop flexible, tax-efficient gifting strategies. This approach ensures that clients can make the most of current and future exemptions to benefit their families, creating impactful, tax-optimised wealth transfers. ?

3. Enhanced Role of Trusts in Wealth Transfer?

Trusts remain a robust vehicle in IHT planning, particularly for high-net-worth individuals. Budget changes affecting reporting, rates, or oversight could prompt a re-evaluation of these structures.? ? Advisers may wish to proactively review clients’ trust arrangements, ensuring they remain advantageous under future regulations and offer a well-rounded approach to generational wealth management.? ?

Your Generational Wealth Planning Partner?

Estgro is the go-to tool for advisers to stay ahead of policy changes and deliver accurate, effective wealth transfer advice to clients.?

With Estgro, advisers can thoroughly assess clients’ estates, factoring in any updates from the latest budget. Estgro’s advanced recommendations signpost advisers to any risks or estate planning opportunities that are contained in their client’s file, highlighting mitigating actions and calculating potential inheritance tax savings that are available. ?

Estgro equips advisers with unparalleled strategies for protecting and maximising clients' estates, ensuring they adopt the most efficient approaches to preserve wealth for future generations.?

Visit www.estgro.com to find out more.