The Budget 2024 and your personal financial planning

Rachel Reeves delivered the Autumn 2024 budget on 30th October which contains a number of measures relevant to personal tax planning including Inheritance Tax and Capital Gains Tax Changes. Some of the changes are effective immediately whilst others are subject to Consultation Periods.

Changes to Inheritance Tax (IHT) in the Autumn 2024 budget

• The Nil-Rate Band Threshold of £325,000 has been frozen since 6 April 2009. The freezing of this threshold has been extended to 5 April 2030. The Residence Nil-Rate Band has been frozen at £175,000 since 6 April 2020 and will remain at this level for the time being.
• Under the current rules, qualifying assets can benefit from 100% relief by way of Agriculture Property Relief and Business Property Relief, regardless of their value. From 6 April 2026, 100% relief will only apply to the first £1million of Agriculture and Business qualifying assets. Qualifying assets in excess of this cap, will only be eligible for 50% relief which in effect means a 20% rate of Inheritance Tax on those assets. This could also affect Trusts which hold assets qualifying for APR or BPR.
• It is important to note that Agricultural Property Relief will be extended to land managed under an approved environmental agreement from 6 April 2025.
• At the moment, some stocks and shares also enjoyed the benefit of 100% BPR when specific criteria were met, but this is also set to change from April 2026. The relief on Alternative Investment Market (AIM) shares, Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS) will be reduced to 50%. This gives an effect IHT rate of 20%.
• There were rumours that the budget would include changes to the 7 year rule for lifetime gifts to fall outside of estates for IHT purposes however no such changes were made.
• From 6 April 2027, most unused pension funds and death benefits from a pension will be included within an estate for inheritance tax purposes and the scheme administrators will become liable for reporting and paying any inheritance tax due to HMRC. The finer details are still yet to be published as a technical consultation is taking place, which closes in January 2025.

Changes to Capital Gains Tax (CGT) in the Autumn 2024 budget

• The rate of CGT on non-residential property assets for basic rate tax payers has increased from 10% to 18%, and for higher rate tax payers has increased from 20% to 24%.
• The rate of CGT for disposal of residential property (except principal private residences) remains at 24%
• Rates payable by trustees and personal representatives also increases from 20% to 24% on all Capital Gains, including residential property.
• The rate of CGT that applies to Business Asset Disposal Relief and Investors’ Relief is increasing to 14% for disposals made on or after 6th April 2025 and from 14% to 18% for disposals made on or after 6th April 2026.
• The rate of CGT for Investors’ Relief increases from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026. The lifetime limit will reduce to £1million with immediate effect.

Taking Action

It is important for everyone to consider and seek advice about whether these changes affect them and whether their wills need to be reviewed. It may also be necessary to seek financial advice to ensure any estate planning remains effective. If you would like to seek further advice or have any queries, please do not hesitate to contact a member of our team on 0191 232 9547.