The UK’s Autumn 2024 Budget has introduced some far-reaching changes that will impact both inheritance tax (IHT) and pensions, reshaping the landscape of wealth management and estate planning for many individuals. With the freeze on inheritance tax thresholds extended until 2030, alongside new policies that could see pensions hit with IHT charges from 2027, individuals and families are urged to rethink their strategies for passing on wealth. Meanwhile, pensions are no longer exempt from IHT, and certain reliefs, such as those for agricultural and business property, will be capped at £1 million starting in 2026.
These reforms highlight the government’s focus on tightening the tax system, aiming to increase revenue while affecting millions of savers and beneficiaries. Now more than ever, a proactive approach to financial planning is essential in light of these new tax changes.
Key changes to be aware of:
Inheritance Tax (IHT)
- Nil-Rate Bands Frozen: The IHT nil-rate band (£325,000) and residence nil-rate band (£175,000) will remain frozen until April 2030.
- Inherited Pensions Taxation: Starting April 2027, unused pension funds and death benefits will be included in the estate for IHT purposes, potentially increasing tax liabilities for beneficiaries.
- Agricultural and Business Property Reliefs: From April 2026, these reliefs will be capped at £1 million, with any value above this threshold receiving only 50% relief.
Watch our video below, where Director Peter Hill talks further about the IHT changes:
Pensions
- Inheritance Tax on Pensions: As mentioned, from April 2027, pensions will no longer be exempt from IHT, affecting estate planning for pension holders.
- Help to Save Scheme Extension: The government will extend the Help to Save scheme for two years from April 2025, with eligibility expanded to all individuals in receipt of Universal Credit earning £1 or more.
Watch our video below, where Tax Director Gordon McCaw talks further about the Pension changes:
These new changes are set to impact estate planning and alter pension strategies for many. It will be necessary for individuals to review financial plans to adapt to the new tax landscape and stay a float. If you are concerned about the changes and want some support, please get in touch with us today on 01752 220979 and speak to one of our specialists.