Budget 2024: Key Inheritance Tax Changes That Could Impact Your Estate Planning

The 2024 UK Autumn Budget introduces significant updates to inheritance tax (IHT), reflecting the new government’s focus on perceived fairness and increasing revenue generation. The 2 key changes to be aware of:

1. Pensions in IHT: For the first time, the value of pension pots will be considered part of an estate’s total value if it exceeds the IHT threshold. This change could prompt wealthier individuals to rethink their retirement strategy, as pensions had enjoyed a degree of exemption from IHT. 

2. Changes to Reliefs: From April 2026, business and agricultural property reliefs will be adjusted. The first £1 million of combined business or agricultural assets will continue to receive 100% relief, but relief for amounts beyond this will decrease to 50%. The intention is to limit complex/strategic tax planning while protecting smaller estates. 

Although these reforms are set to impact more estates than before, the government believes that most families will remain unaffected, as most estates fall below the current IHT threshold. The reasoning behind these changes is to ensure wealthier estates contribute more equitably to public finances. 

Individuals and families should review their estate plans promptly – taking professional advice is essential to navigate these changes and preserve assets for their loved-ones.