How to develop a truly ‘holistic’ estate planning strategy for clients
7 November 24
7 November 24
The much-anticipated Autumn Budget was Labour’s first since coming into power in July this year. While most of the headlines since have focused on the £40 billion tax raise and increases to employer National Insurance Contributions, we wanted to look at some of the key changes to inheritance tax (IHT) and Business Relief, which will likely raise a number of questions with clients about their estate planning.
Join our estate planning webinar
To put these changes into context, we hosted an adviser webinar hosted by Jonathan Parr (Partner & Head of Product Development), Jack Rose (Head of Sales) and Diana French (Retail Strategy Director). Watch the recording here.
Here are the key post-Budget estate planning points to consider
IHT thresholds unchanged…
The Budget confirmed that the current two main IHT allowances, the nil-rate band and the residence nil-rate band will stay fixed at current levels until 6 April 2030. This means the nil-rate band remains fixed at £325,000 and the residence nil-rate band continues at £175,000 (with the taper starting at £2 million).
…but unspent pensions to be brought into estates
Chancellor Rachel Reeves also announced that from April 2027, unused pension funds and death benefits payable from a pension will be included in the value of a person’s estate for IHT purposes. This is a significant change likely to affect lots of clients, included many who will have expected to inherit pension pots completely IHT-free, and will make talking to clients about IHT planning even more important.
Changes to Business Relief
As a reminder, through Business Relief, an estate can claim 100% relief from IHT on shares or qualifying business assets, provided the deceased owned these for at least two years before their death. Before the Budget announcement, there was no limit on the amount of relief from IHT that could be claimed. However, the Budget introduced changes that will be coming into effect from April 2026. These changes are:
What about Business Relief in relation to trusts?
We understand that where a settlor sets up multiple trusts on or after 30 October 2024, the government intends to introduce rules to ensure the £1 million Business Relief allowance is divided between trusts. There will be further information available in the coming months, but it will likely negate the benefit of settling qualifying assets into trust to get 100% relief on over £1 million.
How do the changes impact the Triple Point Estate Planning Service?
The Triple Point Estate Planning Service only invests in private unquoted companies, and does not invest in companies listed on AIM. This means there is no reduction in Business Relief for investors that hold less than £1 million qualifying assets. However, where investors hold more than £1 million in qualifying assets, from April 2026, the 50% relief will apply to holdings in excess of £1m.
How many people will be affected by the changes to Business Relief?
We think the changes to Business Relief will affect relatively few estates when introduced. According to HMRC, out of the 4,170 estates that claimed Business Relief in the 2021/22 tax year, the vast majority (88%) made claims of £1 million or less. It’s also worth noting that from 2026, those estates with qualifying holdings over £1 million will benefit from 100% relief on the first million, and 50% on the remainer, still a significant IHT reduction for most estates.
In summary, Business Relief is still clearly an important and valuable estate planning strategy for most clients.
Important information
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment. Take 2 mins to learn more.
Related articles