The long-awaited budget from the Labour Government is now in place. As such, we will break down the key points to note for inheritance purposes.
- The Nil Rate Band limit of £325,000 has been frozen until 2030. This means that estates are entitled to the sum of £325,000 before being subject to inheritance tax which is currently charged at 40%. Depending on the circumstances, there are currently reliefs and exemptions which can be claimed to decrease the sum which may be subject to inheritance tax. If you are unsure of the exemptions or reliefs that can be claimed, please do not hesitate to contact us.
- There have been significant changes to Capital Gains Tax (CGT) which are to be implemented by the new Labour Government. Currently the lower limit of CGT is 10% which is to be increase to 18%. The higher rate of CGT which was 20% has increased to 24%. The rate for residential property will remain unchanged.
- Also, the Budget set out that in April 2027, unspent pension pots will be included within your estate and as such, will be incorporated for inheritance tax purposes.
- The reliefs for Agricultural and Business Property will have a 1-million-pound cap from April 2026. Any amounts in excess of this, will be subject to an inheritance tax rate of 20%.
- The current Non-Dom Tax Regime will be abolished, and the Residence Based Scheme will now be implemented.
- Although not strictly related for inheritance purposes, the Stamp Duty Land Tax (SDLT) increased immediately for buy to let and second home buyers. The Government advised that this was to allow for first-time buyers to enter into the property market. The rate of SDLT was 3% which has now increased to 5%.
If you are concerned about the changes which may be implemented from the budget in respect of your estate planning, please do not hesitate to contact the Private Client Team on 02080495888 or [email protected].
