Budget 2024: What the recent Budget announcements mean for estate and tax planning

Following the Budget on 30th October 2024, significant changes were announced that could affect the way individuals and families approach estate planning, tax management, and wealth preservation. At Finch Tax, we understand that changes like these can feel overwhelming, especially when they may directly impact your future plans. We’re here to help you understand these updates, ensuring your financial and estate plans align with the latest tax rules.

Below, we share what the most relevant announcements for our clients and what the Budget 2024 announcements mean for estate and tax planning.

Capital Gains Tax updates

The Capital Gains Tax (CGT) regime has seen significant adjustments, especially relevant to trustees, personal representatives, and individuals with business interests.

• Rate increases

  For disposals made on or after 30 October 2024, CGT rates will increase. The lower rate will rise from 10% to 18%, while the higher rate will increase from 20% to 24%. These new rates will apply to most assets, though sales of second homes remain taxed at the existing 18% and 24% rates. Trustees and personal representatives will also face higher CGT rates, moving from 20% to 24%.

  
  

• Annual exemption remains low

  The CGT annual exempt amount remains frozen at £3,000 for 2025/26. This limited exemption makes it even more crucial to plan ahead and manage gains proactively, especially for high-value assets.

  
  

• Business asset disposal relief and investors’ relief changes

  From 6 April 2025, the CGT rate for individuals claiming Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14%, and further to 18% from April 2026. Additionally, the lifetime limit for Investors’ Relief will be reduced to £1 million from 30 October 2024, taking into account any previous qualifying gains.

Inheritance tax updates

Inheritance tax (IHT) has become an area of focus with important changes to both thresholds and asset reliefs.

• Threshold freeze extended

  The IHT nil rate band will remain frozen at £325,000 until 2030, as will the residence nil rate band at £175,000. This freeze effectively increases the tax burden on estates as property and other asset values continue to rise.

  
  

• Inheritance tax on pension pots

  Starting from 2027, unused pension funds and death benefits from pensions will be included within an estate for inheritance tax purposes. This may have implications for those relying on pension funds as a tax-efficient way to pass on wealth.

  
  

• Reliefs for business and agricultural assets

  From April 2026, Agricultural Property Relief and Business Property Relief will apply to a combined limit of £1 million. Assets within this limit will benefit from 100% IHT relief, while amounts exceeding this limit will receive only 50% relief. Additionally, shares on certain recognised exchanges (such as AIM) will qualify for a 50% relief in all cases.

  
  

• Environmental land management

  From April 2025, land under environmental management agreements will qualify for Agricultural Property Relief. This expansion could provide significant relief for estates managing agricultural land in an environmentally sustainable manner.

  
  

Personal tax and pension changes

Personal tax bands and allowances have also been adjusted, along with some pension tax limits, which could impact your overall tax planning.

• Tax bands and rates remain steady

  The basic rate of income tax remains at 20%, with a frozen band of £37,700 until April 2028, keeping the higher rate threshold at £50,270. For those subject to the additional 45% rate, the threshold will be £125,140 in 2025/26. These rate freezes mean that as incomes rise with inflation, more people may fall into higher tax brackets.

  
  

• Savings and investment allowances

  The savings allowance remains at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, while no allowance applies for additional rate taxpayers. This means that higher-income savers may face increased tax burdens on interest income, highlighting the importance of tax-efficient savings and investment planning.

  
  

• Pension tax limits

  In 2025/26, the Annual Allowance remains at £60,000, though for those with ‘threshold income’ above £200,000, it will taper to a minimum of £10,000. The Lump Sum Allowance is set at £268,275, with an additional Lump Sum and Death Benefit Allowance of £1,073,100. With these allowances in place, high earners may need to reassess their pension contributions to avoid unexpected tax charges.

Get tailored advice on navigating the Budget 2024 changes

Budget changes can create complexities in tax and estate planning, but they also present opportunities for careful planning to reduce liabilities. At Finch Tax, we provide clear, proactive guidance to ensure your financial and estate plans align with the latest tax rules.

We can work with you to understand your unique situation, offering compassionate and expert advice to make complex financial matters manageable. Get in touch with us today to discuss how we can support your planning needs in light of these recent Budget announcements

Disclaimer: The information provided in this article is intended for general informational purposes only and should not be construed as specific financial, tax, or legal advice. The recent Budget changes are complex, and individual circumstances can vary. We strongly recommend consulting with a qualified tax, IFA or legal advisor to discuss how these updates may impact your personal or business affairs.