A Time For Action
January 28, 2025 12:49 pm - Categorised in: Wills, Trusts & Probate
The Autumn 2024 budget proposes significant changes to inheritance tax (IHT) which will have a major impact on estate planning. These changes are greater than any seen in the last decade and their wide scope means many of us will be impacted.
Pensions are being targeted in these changes. Currently, pension funds such as Self-Invested Personal Pensions (SIPPs) are a tax-efficient tool for IHT planning allowing beneficiaries to inherit the residual pension free of tax if the holder dies before 75. Under the proposals, most pensions will suffer IHT when the fund is passed on after death.
From April 2026, the relief on agricultural and business assets will be restricted. Currently, there is no cap on how much relief you receive on qualifying business and agricultural property. However, the 100% IHT relief for both types of assets will be capped at a total of £1million with everything above that receiving 50% IHT relief. This makes the rate of tax at 20% on the relevant assets above £1million. Traditionally, these reliefs help with the succession of family businesses, allowing them to be passed on to the next generation. The changes may require a fresh look at succession planning.
Further IHT reliefs are being restricted. Companies on the Alternative Investment Market (AIM) owned for more than 2 years currently qualify for relief at 100% making them free from IHT. From April 2026, these shares will only qualify for 50% IHT relief.
Due to these proposed changes, it is advisable to seek specialist advice sooner rather than later to protect your family’s assets. Contact Grace Steele to discuss your options.
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