Autumn Budget 2024: What the Changes Mean for You and Your Family’s Future
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As we unpack the Labour Government’s 2024 Autumn Budget, we want to take a moment to address what it really means for you, your family, and the legacy you’re working so hard to protect. These new measures will impact inheritance tax, pensions, capital gains, AIM shares, Business Property Relief, and non-domicile tax status in ways that could change the way you plan for the future.
At Wills and Probate Services, we understand that this isn’t just about numbers or policies—it’s about your peace of mind and the well-being of your loved ones. Let’s walk through what’s new and what it might mean for your plans.
1. Inheritance Tax (IHT) Freeze: An Ongoing Challenge for Families
The decision to freeze Inheritance Tax thresholds until April 2030 means that IHT, a concern for many families, remains in place at a nil-rate band of £325,000, with the residence nil-rate band at £175,000. While this is unchanged, the impact of rising asset values might mean that more families face a tax burden on estates that wouldn’t have been taxable just a few years ago.
2. Pensions and Their Place in Your Estate Plan
The budget also makes a significant change starting in April 2027: unspent pension funds, a lifeline for some in later years, will now be liable for IHT upon death. This shift may affect families who have relied on pensions as a way to pass on their legacy tax-free.
Pensions have been a strong pillar of retirement and inheritance planning, often viewed as a tax-efficient way to leave wealth for loved ones. However, the Budget’s changes mean that from April 2027, unused pension funds will count toward your IHT liability. This decision impacts families across the country, potentially leading to difficult conversations around revisiting long-standing financial strategies.
3. Capital Gains Tax (CGT): What the Rate Increase Could Mean
Another key change in the Budget is an increase in Capital Gains Tax (CGT) rates—from 10% to 18% at the lower rate and from 20% to 24% at the higher rate. If your family’s financial future includes assets that may be sold, these higher CGT rates could influence decisions about when and how to handle those transactions. This is especially relevant if you have investments in assets that are part of your estate planning.
The government has also outlined phased changes for Business Asset Disposal Relief (BADR) and Investors’ Relief (IR), bringing these rates to 18% by 2026. While the increases allow some time for adjustment, these changes make it important to review any plans to dispose of business assets and consider how it might affect your family’s inheritance.
4. AIM Shares and Business Property Relief (BPR): A Shift in Tax Efficiency
The Budget’s revisions to Business Property Relief could have a direct impact on those who have invested in AIM shares or agricultural assets as part of a tax-efficient legacy. While AIM-listed shares have previously been an IHT-efficient choice, the relief rate for these shares will now be set at 50%, affecting any inheritance strategy that includes AIM shares for tax savings.
With this change, the first £1 million of combined agricultural and business assets still qualifies for 100% relief, but any amount above that is only eligible for 50% relief.
5. Non-Domiciled Status: A New Approach
For those with non-domiciled status, there’s a major change ahead. From April 2025, the UK will shift to a residence-based tax system, abolishing the remittance basis and instead offering a four-year grace period for relief from foreign income and gains.
How We Can Help
Here at Wills and Probate Services, we recognise that these changes can feel overwhelming. Estate planning is about much more than tax—it’s about security, preserving memories, and passing on values. It has never been a more important time to plan for your future. Get in contact with Wills & Probate Services to see how we can help you to protect your legacy.
Frequently Asked Questions on the Autumn Budget 2024
How does the Autumn Budget 2024 impact inheritance and estate planning?
The Autumn Budget 2024 introduces several changes that impact inheritance and estate planning, including an extended freeze on Inheritance Tax (IHT) thresholds, an increase in Capital Gains Tax (CGT) rates, adjustments to Business Property Relief (BPR) for AIM shares, and the phasing out of non-domicile tax status. These measures may increase tax liabilities for many families and estate planners.
What does the Inheritance Tax freeze in 2024 mean for UK families?
2. What does the Inheritance Tax freeze in 2024 mean for UK families?
The government’s freeze on the IHT thresholds until 2030 means that the nil-rate band remains at £325,000 and the residence nil-rate band at £175,000. As asset values continue to rise, this threshold freeze could bring more estates into the taxable range, potentially impacting families previously outside of IHT liability.
How does the IHT threshold freeze affect estates in the UK?
The threshold freeze will gradually increase the IHT burden on estates as asset values rise. Estates valued above these thresholds could be subject to 40% IHT, emphasising the need for strategic estate planning to help mitigate tax liabilities.
What are the new Capital Gains Tax rates in the UK for 2024?
The Budget raised CGT rates to 18% at the lower rate (up from 10%) and 24% at the higher rate (up from 20%). This change affects those disposing of assets, particularly business owners and investors, and may influence the timing and method of asset sales within estates.
How will pensions be impacted by Inheritance Tax changes in 2024?
Starting in April 2027, unspent pension funds will be included in IHT calculations upon the pension holder’s death. This is a significant change, as pensions have traditionally been exempt from IHT.
What changes are coming to non-domicile tax status in the UK?
The Autumn Budget abolishes the remittance basis for non-domiciled individuals in April 2025, moving to a residence-based system. Under the new regime, non-doms receive tax relief on foreign income and gains for the first four years of UK residence, but offshore structures may no longer shelter assets from UK tax.
How is Business Property Relief changing in 2024?
Starting in April 2026, the full 100% BPR will only apply to the first £1 million of qualifying business and agricultural assets. Beyond this, BPR will be capped at 50%, including for AIM-listed shares. This change could reduce the tax efficiency of certain business assets in estate planning.
Are AIM shares still tax-efficient for inheritance in 2024?
While AIM shares will continue to benefit from BPR, their relief rate will reduce to 50% in April 2026. This partial relief lowers the tax advantage AIM shares once offered and could impact those who have relied on AIM shares for IHT planning.
What updates should I know about for UK estate planning in 2024?
Estate planning updates include IHT threshold freezes, increased CGT rates, limitations on BPR, and changes to non-domicile tax treatment. You should plan early to preserve family wealth.
How will the Autumn Budget affect legacy planning?
The budget’s changes impact legacy planning by potentially increasing tax liabilities through IHT and CGT adjustments. Freezing IHT thresholds and including unspent pensions in IHT encourage revisiting financial plans to ensure assets can be efficiently passed to future generations.
Will unspent pension funds be subject to IHT in the UK?
Yes, starting from April 2027, unspent pension funds will be subject to IHT upon the holder’s death. This new tax treatment applies to any remaining pension assets, impacting families who have previously counted on pensions as a tax-free inheritance vehicle.
How will the new Capital Gains Tax rates affect estates?
With CGT rates increasing to 18% and 24%, estates may face higher tax burdens on asset sales. This change affects any beneficiaries who plan to liquidate inherited assets, such as investment portfolios or business shares.
Are AIM shares still viable for tax planning in the UK?
AIM shares remain eligible for BPR, but the relief is capped at 50% starting in April 2026. While AIM shares are still viable for some tax savings, they may no longer provide the full IHT exemption previously available, leading many to seek alternative options for tax-efficient investments.
What is changing with the non-dom tax status reform in 2024?
The reform abolishes the remittance basis of taxation for non-domiciled individuals in April 2025, establishing a residence-based tax system. Non-doms will have tax relief on foreign income and gains for the first four years of UK residence, but offshore IHT shelters will no longer be exempt.
Is there Inheritance Tax on unspent pensions in the UK?
As of April 2027, unspent pension funds will indeed be subject to IHT, marking a shift from their previous exempt status. This change makes it vital for individuals to assess their pension contributions and take financial advice from a financial advisor.
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