Inheritance Tax (IHT) can be a daunting and complex subject, particularly in light of recent news coverage on some of the key changes announced in Labour’s first Budget.
While it may feel overwhelming, effective IHT planning goes a long way to protecting your family’s assets and is a proactive means of safeguarding wealth for the future.
Everyone’s circumstances are different, and seeking professional advice ensures the most appropriate reliefs are utilised to potentially minimise future IHT liabilities.
Changes to reliefs
Inheritance tax rules have stayed constant for several years now and the recent Budget confirmed that the nil rate band will remain frozen at £325,000 until 2030 and the ‘7-year rule’ for lifetime gifting remains unaltered.
In contrast, other measures were announced that may impact on your inheritance tax position, specifically business owners, farmers and those with IHT-friendly investments, such as AIM shares.
The series of changes to IHT rules will raise £2bn a year by 2029-30, according to the Chancellor, Rachel Reeves – measures include:
- Applying IHT to inherited agricultural assets worth more than £1m for the first time from April 2026. As a result, death estates will be subject to 20% IHT on all agricultural and business property over the £1 million allowance;
- Shares designated as ‘unlisted‘ (most commonly for general investors these are Alternative Investment Market (AIM) shares) currently benefit from 100% Business Relief. This will reduce to 50%, with no allowance, so IHT will be payable on these investments at 20%;
- Unused pension funds and death benefits payable from a pension into a person’s estate will be subject to IHT with effect from 6 April 2027.
Tax laws are subject to change and it is helpful to keep informed with the current regulations and IHT planning tools. You may wish to consider succession planning, making lifetime gifts and the use of trusts – we help you to think through the full tax implications of reliefs before taking any action.
Having an up-to-date will is another important part of estate and inheritance planning. When a person dies without leaving a will, their estate is shared out according to certain rules – these are called the ‘rules of intestacy’.
Get in touch with the team
Do contact us if you wish to discuss your inheritance tax exposure as well as discuss ways to reduce this, where possible, by lifetime planning.
Find out more about how we can help with your unique inheritance tax and later life planning needs by getting in touch with the team at attleborough@mapartners.co.uk or call 01953 452077
