Inheritance TaxWillsBudget 2024 – Changes to IHT and CGT

The Chancellor of the Exchequer, Rachel Reeves, has announced a number of changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT) in the 2024 Autumn Budget that will impact will writers and estate planners. Here is a summary of the changes:

Freezing of Allowances

The Nil Rate Band and Residence Nil Rate Band will be frozen at their current values of £325,000 and £175,000, respectively, until April 2030. The taper threshold for the Residence Nil Rate Band will also remain at £2 million. Before the Budget, these figures were due to be frozen until April 2028.

Agricultural and Business Relief

Agricultural property relief (APR) and business property relief (BPR) are to be reformed. The 100% rate of relief will continue to apply to the first £1 million of combined agricultural and business assets. For assets above £1 million, the rate of relief will be 50%. For shares designated as “not listed” on the markets of a recognised stock exchange, such as AIM, the rate of BPR will be reduced to 50% in all circumstances. These changes will take effect from April 2026.

Pensions and Death Benefits

The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for IHT purposes. This will take effect from April 2027.

Changes to Taxation of Non-Doms

A new residence-based system for IHT will be introduced, intended to end the use of offshore trusts to shelter assets from IHT. This will take effect from April 2025.

Capital Gains Tax

The lower rate of CGT will rise from 10% to 18%, and the higher rate from 20% to 24%. This will take effect from April 2025. This change will bring CGT on other assets in line with the rates charged on residential property.

Conclusion

We are still waiting for the fine details of how these changes will be implemented. When further information is released, we will provide further guidance.

 

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