Sabrina Davies in the firm’s Private Client Department breaks down the key points of what the Autumn Budget means for estate planning and inheritance tax.
- The inheritance tax-free allowances, which includes the Nil Rate Band Allowance of up to £325,000 per person and also the Residence Nil Rate Band (when you leave your residential property to your direct descendants) of up to £175,000, will retain their value until 2030. The current rate of inheritance tax is 40% of the estate value which is over the available allowances.
- Pension Pots have been largely free of inheritance tax. However, the Chancellor has announced that they will now form part of the overall value of an estate for inheritance tax purposes. This has been proposed to take effect in April 2027.
- Agricultural and business property have previously attracted up to 100% relief from IHT providing the assets meet the required criteria. However from April 2026, the 100% relief will be restricted to the first £1 million. If the property exceeds this value, then the excess value will be subject to the reduced inheritance tax rate of 20%.
It is important that you seek legal advice when making or updating your existing Will. Please do not hesitate to contact our Wills & Probate Teams on 02920 470 909 (Cardiff), 01633 213411 (Newport), 01873 857 555 (Abergavenny).