The Autumn Budget delivered on 26 November 2025 introduced significant measures affecting estate planning and wealth transfer. These changes build on reforms announced in the Autumn 2024 Budget and will have a major impact on Inheritance Tax (IHT) exposure for high-net-worth individuals.
Here we summarise the latest developments and ongoing planning opportunities to help you safeguard your assets.
1. Autumn Budget 2025 – What’s New?
IHT Thresholds Frozen Until April 2031
- Nil Rate Band (£325,000) and Residence Nil Rate Band (£175,000) remain unchanged until April 2031.
- Impact: Rising asset values will increase IHT exposure (fiscal drag).
Business & Agricultural Property Relief (APR/BPR) – Spousal Transfer
- From 6 April 2026, the £1m combined allowance for 100% APR/BPR will be transferable between spouses/civil partners, even if the first death occurred before April 2026. This has been lobbied hard and is a welcome step down from the Government, but careful planning where APR/BPR assets are in play remains key.
- Above £1m, relief reduces to 50%.
Pensions and IHT
- From 6 April 2027, unused pension funds and death benefits will be included in the estate for IHT purposes.
- Personal Representatives (PRs) will be responsible for reporting and paying IHT on unused pension funds and death benefits.
- Pension Scheme Administrators may be directed by PRs to withhold up to 50% of taxable benefits for up to 15 months to cover IHT liability.
Other Measures
- 100% IHT relief confirmed for infected blood compensation payments.
- High-value property surcharge (“mansion tax”) from April 2028:
- £2,500 annual charge for homes worth £2m+, rising to £7,500 for £5m+ properties.
2. Autumn 2024 Budget Changes – Still Relevant
These planning points remain critical:
- APR/BPR Cap Introduced
- From April 2026, 100% relief capped at £1m combined APR/BPR; 50% relief applies above this threshold.
- Family Investment Companies (FICs)
- Tax-efficient wealth transfer while retaining control.
- Advance Gifting Strategies
- Lifetime gifts reduce estate value; consider the seven-year rule.
- Trust Planning
- Trusts remain effective for asset protection and IHT mitigation.
- Life Assurance in Trust
- Provides liquidity to meet IHT liabilities without asset sales.
3. Recommended Actions
- Review Estate Plans Now
- Factor in APR/BPR cap and spousal transfer rules.
- Consider Gifting and Trust Strategies
- Start the seven-year clock early; explore trust structures.
- Plan for Pension Inclusion in IHT
- Assess options for withdrawals or insurance cover.
- Prepare for Property Surcharge
- Review ownership structures for high-value homes.
- Stay Informed
- Further reforms remain possible; schedule regular reviews.
Next Steps
We recommend a comprehensive review of your estate planning arrangements to ensure they align with your objectives and the new regulatory environment.
Contact us today to discuss tailored strategies for your circumstances.
