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The Autumn Budget’s Impact on Inheritance Tax Planning
These reforms aim to address fiscal challenges while promoting fairness in wealth transfer. Below is an overview of the key changes and their implications for IHT planning.
Inheritance Tax Calculation Forecast*
Get your affairs in order and use our online IHT calculator. The calculator applies to the 2024/25 tax year only.
Key Changes to Inheritance Tax
1. Freezing of IHT Thresholds Until 2030
2. Inclusion of Pension Funds in IHT Calculations
3. Reform of Agricultural and Business Property Reliefs
4. Reduction of Relief on AIM Investments
5. Abolition of Non-Domicile Tax Status
Implications and Reactions
These reforms have sparked significant debate. The inclusion of pension funds in IHT calculations and the reduction of reliefs on agricultural and business properties have raised concerns about the financial impact on families and businesses. Critics argue that these changes could lead to the sale of family-owned farms and businesses to meet tax liabilities, potentially affecting the continuity of family enterprises.
The reduction of relief on AIM investments may discourage investment in smaller companies, potentially impacting their growth and access to capital. The abolition of non-domicile status is expected to affect wealthy individuals who have benefited from favourable tax treatment, possibly leading to a reassessment of their residency status.
Conclusion
The Autumn Budget 2024 introduces substantial changes to the UK’s IHT regime, reflecting the government’s intent to increase tax revenues and promote fairness. These reforms will have wide-ranging implications for estate planning, investment strategies, and the financial decisions of individuals and businesses. It is advisable for those affected to seek professional advice to navigate these changes effectively.
* Estate Planning and Inheritance Tax are not regulated by the Financial Conduct Authority
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There are numerous ways to mitigate Inheritance Tax Planning (IHT), but we find that the majority of cases utilise a combination of the following:
Inheritance tax planning traffic light comparison
| Access | Speed | Simple | Control | Cost | |
|---|---|---|---|---|---|
| Gifting | |||||
| Whole of Life | |||||
| Loan Trust | |||||
| Discounted Gift Trust | |||||
| Flexible Reversionary Trust | |||||
| Business Property Relief |
Please note: this graphic is subjective to change, not every expert will agree on the distribution of colours. There is much more to know before you act and that you should always seek financial advice first.