Updates to Inheritance Tax you might have missed but need to know

In the 2024 Autumn Budget, Chancellor Rachel Reeves revealed lots of changes and updates and you may have missed these ones regarding Inheritance Tax.

It was revealed in October last year there is upcoming new Inheritance Tax (IHT) rules for Pensions and Businesses.

IHT on Pensions

The new pension rules for Inheritance Tax (IHT), effective from 6 April 2027, will have significant tax implications for estates with unused pension funds. These funds, which were previously excluded from the estate, will now be subject to IHT, potentially increasing the overall tax liability. Beneficiaries may face reduced inheritances, with the tax rate in many cases being significantly more than 40% and potentially closer to 70%.

IHT on Businesses

The new changes to IHT rules for businesses, effective from 6 April 2026, introduce significant limitations on the availability of Business Property Relief (BPR) and Agricultural Property Relief (APR), particularly through the £1 million cap and reduced relief for certain shares. Businesses must carefully review their estate planning strategies to mitigate the impact of these changes. Compliance with the revised eligibility criteria and proactive planning will be essential to minimise tax liabilities and preserve the value of business assets for future generations.

 

These changes show the importance of staying informed and proactive in estate planning to ensure that both personal and business assets are protected and preserved for future generations. 

 

March 2025

 

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