Budget 2024 - The Impact on Your Estate Planning

The Autumn Budget 2024 introduced several wide reaching measures that could change the way you plan to pass your assets on. From the continued freeze on inheritance tax thresholds to new limits on business and agricultural reliefs, changes to AIM share relief and the inclusion of pensions in IHT calculations, now is the time to review your arrangements and take practical steps to protect your family and your legacy.

Key Budget headlines that affect your estate

Inheritance tax thresholds frozen to 2030

The Nil Rate Band remains at £325,000 and the Residence Nil Rate Band at £175,000. In effect this allows up to £500,000 to be passed IHT free in many cases before the 40% rate applies to the excess. Because property and investments often rise in value over time, the freeze increases the risk that your estate could exceed those bands. For example, a couple with a jointly owned home and savings totalling around £700,000 may now face a larger IHT bill than they expected a few years ago.

Limits on Business and Agricultural Property Relief

From April 2026, full relief for qualifying business or agricultural assets will be capped at the first £1 million, with assets above that receiving 50% relief. This change is significant for farmers and business owners planning succession. If you hold farmland, a family business or business property, you should check whether those assets meet strict qualifying conditions for BPR or APR and consider how the cap affects any planned transfers.

Pensions to be included in inheritance tax

From April 2027, pensions will be brought into IHT calculations. This is a major change for anyone who treated pensions as outside the IHT net. There is a 90 day consultation to clarify implementation, but you should already be speaking with your financial adviser about the possible tax impact and how options such as nominee arrangements, beneficiary nominations and drawdown strategies may need to change.

Reduced relief on AIM shares

AIM qualifying shares will move from 100% relief to 50% relief from April 2026. If you use AIM investments as part of your estate plan, the effective tax on those assets when inherited will increase. A review of your investment allocation and succession plan with a financial adviser is recommended.

Abolition of non-domicile status

From April 2025, UK residence based rules will replace the domicile based IHT rules so those who have been UK resident for ten years or more may face IHT on worldwide assets. This is a complex area. If you have connections abroad, seek specialist tax advice promptly. For official guidance on IHT, see the government IHT overview on GOV.UK: www.gov.uk/inheritance-tax.

Practical steps you can take now

With these changes unfolding, take a proactive approach. Below are practical, UK specific actions you can consider to protect your estate, reduce uncertainty for beneficiaries and keep your affairs in order.

• Value your estate regularly - get a realistic valuation of property, investments and business interests so you know how close you are to IHT thresholds.
• Review or update your Will - ensure your Will reflects your current wishes and considers potential new IHT exposures. If you do not have a Will, consider our simple online option for a quick, effective start: Online Will.
• Consider trusts - trusts can help control how assets are passed on and may offer IHT planning benefits. Discuss suitable trust structures with an adviser and see our trusts service: /trusts.
• Talk to your financial adviser about pensions - with pensions likely to be included in IHT, review nominations and drawdown strategies now.
• Keep records for probate - a clear inventory of assets, accounts and documents speeds up probate and reduces disputes. Our probate guidance can help you prepare: /probate.
• Set up LPAs - lasting powers of attorney protect your decision making if you lose capacity. If you do not already have one, read about how we can help: /lasting-power-of-attorney.
• Consider IHT insurance - life policies to cover potential future IHT bills are an option that a regulated financial adviser can explain.

Example scenarios to help you think ahead

Example 1: You own a buy to let portfolio in a limited company - these rarely qualify for BPR. If your plan was to rely on BPR to reduce IHT, you should reassess the structure with a tax specialist.

Example 2: You hold AIM investments worth £400,000. Under the new rules, only 50% relief may apply after April 2026, increasing estate exposure. A staged gifting plan or portfolio restructuring could reduce future IHT bills.

Need help reviewing your plan?

At Beneficial Family Wills we work with financial and tax advisers so you can receive joined up advice. If you would like a review of your Will, trusts or pensions, book a free initial consultation for tailored guidance. Start with our Will writing service: /will-writing, or contact our friendly team for a wider review: /contact.

Disclaimer - This article is for information only and does not constitute legal, tax or financial advice. If you are affected by these changes and do not have an adviser, we can recommend trusted professionals authorised to advise in this area.