Inheritance Tax changes in the Autumn Budget 2024

Chancellor Rachel Reeves delivered Labour’s first Budget in 14 years to Parliament today and it contained significant changes to both capital gains tax and inheritance tax. Although we await the precise details, the changes announced are sure to have a major impact on estate planning. The following is a summary of the main changes announced.

Capital gains tax

The Chancellor announced increases in the capital gains tax rates that apply to non-residential property gains, from 10% to 18% for lower rate taxpayers and from 20% to 24% for higher rate taxpayers. These increases apply to disposals on or after 30 October 2024 and bring the rates in line with those that apply to residential property gains which remain at 18% for lower rate taxpayers and 24% for higher rate taxpayers.

Inheritance tax

The Chancellor froze the inheritance tax threshold (currently £325,000 rising to £500,000 if a person leaves their home to their children) for a further two years, from 2028 to 2030. This will bring more estates within the scope of inheritance tax as asset values increase in line with inflation, a concept known as “fiscal drag”.

The Chancellor also announced reforms of agricultural and business property relief from April 2026. These include limiting 100% relief to the first £1 million of a person’s combined agricultural and business assets, with 50% relief applying to assets in excess of this, and reducing relief on shares listed on the Alternative Investment Market (AIM) from 100% to 50%.

Finally, and perhaps most significantly, the Chancellor announced plans to bring unused pension funds within the scope of inheritance tax from April 2027. This is a marked change from the current position and will likely mean many more estates that would not pay inheritance tax currently will pay it in the future.

How Goughs can help

At Goughs, we can help to explain the changes to capital gains tax and inheritance tax announced in the Budget and their relevance to you. We and our team of trusted advisors can also help to reduce your exposure to both taxes by ensuring you claim all available allowances, exemptions and reliefs. If you would like more information, please contact us today.

The information contained in the above article was correct at the time of publication. To ensure you are kept up to date with changes to the budgets please visit the Gov.uk website

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