The Autumn 2024 Tax Budget outlines significant updates to Inheritance Tax (IHT), introducing new complexities for individuals and families planning their estates. These changes, set to take effect in 2027, aim to expand the tax base while reshaping relief mechanisms. Here’s what you need to know.
Key IHT Changes
- Tax on Unused Pension Funds
Beginning in 2027, unused pension funds passed on after death will be subject to IHT. Previously exempt, these funds will now form part of the taxable estate. - Caps on Agricultural and Business Property Relief
Relief for agricultural and business properties will now be capped. This adjustment may significantly impact those in the farming and property sectors, particularly family-run operations relying on these reliefs for estate succession planning.
What This Means for Individuals and Families
- Estate Planning Adjustments
These changes may require families to revisit their estate strategies. Unused pension funds, previously leveraged to reduce taxable estates, may no longer serve the same purpose. - Business Succession Challenges
For those in farming or property sectors, capped relief could limit the tax efficient transfer of assets to the next generation, necessitating early planning.
Action Steps: Preparing for IHT Revisions
- Reevaluate Estate Plans
Work with a financial adviser to update inheritance strategies, particularly if your estate includes pension funds or agricultural/business properties. - Consider Alternative Tax Planning Tools
Explore options such as trusts, lifetime gifts, or other vehicles to mitigate IHT exposure. - Seek Professional Guidance
Navigating these changes requires expertise. Consulting with a professional can help tailor solutions to your unique circumstances.
The Bigger Picture
These changes reflect the government’s efforts to close perceived tax gaps while ensuring fiscal sustainability. However, they pose significant challenges for families and businesses trying to secure wealth for future generations.
How We Can Help
At Nuvo, we offer personalised estate planning services to help you navigate the complexities of the evolving IHT landscape. Our advisers specialise in crafting strategies that protect your assets and secure your family’s financial future. Contact us today to discuss how we can support your planning needs.
- House of Lords Library Summary
- HM Treasury Official Budget Document (PDF)
- For those who are more visual learners, watch our short video on Inheritance Tax Rates: Explained
