After a few years of everyone wondering what on earth the Government might do next, the 2025 Budget finally gives us a clearer—though in some cases tougher—set of rules around passing on your hard-earned assets. These changes will affect how I help clients protect what they’ve built, pass on businesses or farms, and look ahead with a bit more certainty. Below is a straightforward overview of the main points to keep in mind as you support clients through the new landscape.
The summary is that taxes are rising substantially for middle England for those who manage to escape Community Care Tax, which can exceed 100%.
Inheritance Tax: Still No Movement on Thresholds means MORE TAX
The IHT nil-rate band (fixed at £325,000 since 2009) and the residence nil-rate band (£175,000) are now frozen until at least 2031. The annual gifting allowance of £3,000 and wedding allowances also remain unchanged.
Bank of England figures show that to keep up with general inflation (never mind house price inflation the £325,000 alone should now be £523,549. Continuing the freeze until 2031 may well mean that the allowance has halved in real terms.
With property and investment values continuing to rise, more estates that used to be comfortably below the line will start creeping into IHT territory. It’s worth taking another look at your position—especially those who’ve seen big jumps in property values or portfolio growth. Whilst the Polegate, Hailsham, Eastbourne and Seaford area has not seen ultra high growth in property values, a large number of what would have been IHT free estates will be taxable now.
From April 2026, both Business Property Relief (BPR) and Agricultural Property Relief (APR) will still be available at 100%, but only on the first £1 million of qualifying assets combined. Anything above that gets just 50% relief.
One genuinely helpful improvement is that any unused share of the £1 million allowance can now pass to a surviving spouse—even if the first death happened before the new rules come in.
Business & Agricultural Reliefs: Big Changes Ahead (April 2026)
If you work with business owners or farming families, existing succession plans may need some careful checking, as the old assumption of “everything gets 100% relief” may no longer hold for larger estates.
Pensions to Become IHT-Chargeable (April 2027)
This is the big shock. From April 2027, pension pots and death-benefit lump sums will form part of the taxable estate. This is a major shift away from pensions being one of the most IHT-efficient ways to pass on wealth.
Anyone with a pension-heavy estate will need a fresh look at their planning—trusts, lifetime gifts, or adjusted drawdown strategies may now give better outcomes than simply leaving a large untouched pension behind which is now going to fall into the IHT Trap.
Higher Taxes on Investment-Based Income
From April 2026, dividend tax goes up. From April 2027, tax on savings interest and rental income also rises.
For clients who rely on these income streams to fund regular gifts, trust planning or general family support, this may tighten things a bit. It may mean revisiting cashflow planning and expectations so gifting strategies remain realistic.
Planning Priorities for 2025–2027
With all these moving parts, the priority for many clients will be a complete review—especially those with significant business, agricultural or pension assets. Several may benefit from bringing forward lifetime gifts while allowances remain flat.
It’s also becoming more important to model “what if” scenarios around timing—liabilities could look very different depending on whether death falls before or after the 2026 and 2027 changes.
Finally, it’s a good time to refresh client materials and conversations. Long-standing assumptions—particularly around pensions and 100% business/agricultural relief—are changing, and clients will appreciate clear, honest guidance on what this means for them.
If you’d like, I can also turn this into a client-ready summary, a newsletter article, or a slide for your updated IHT book.
You said:
article for website, but adding on old standard reasons for review
ChatGPT said:
Here’s a website-ready article in your style, Steve—professional, friendly, and reassuring—with the new Budget changes plus the traditional reasons why clients should review their estate planning regularly.
Why 2025 Is the Year to Review Your Estate Planning
After several years of uncertainty, the 2025 Budget finally gives us a clearer—if slightly tougher—set of rules around passing on wealth. These changes will shape how families protect their assets, how business owners plan their succession, and how we all prepare for the future.
Because of these reforms (and the usual life changes that creep up on all of us), 2025 is an ideal time for a proper review of your Will, LPAs and inheritance planning. Below is an overview of what’s changing, followed by the long-standing reasons why a review is still essential even without new legislation.
What’s Changing in the 2025 Budget
1. Inheritance Tax Thresholds Still Frozen
The IHT nil-rate band (£325,000) and residence nil-rate band (£175,000) will now stay frozen until at least 2031.
With property and investment values rising, this means more estates drifting into IHT territory. If you’ve not reviewed your figures for a few years, now is an ideal time.
2. Major Changes to Business & Agricultural Reliefs (from April 2026)
From April 2026:
- BPR and APR will still give 100% relief, but only on the first £1 million of combined qualifying assets.
- Anything above £1m receives just 50% relief.
- Any unused portion of the £1m allowance becomes transferable between spouses, even if the first death occurred before the new rules.
If you own a business or agricultural land, this is a significant shift and may affect long-held assumptions about what will (and won’t) be tax-free.
3. Pensions to Become IHT-Chargeable (from April 2027)
For the first time, pension pots and death-benefit lump sums will be treated as part of the taxable estate from April 2027.
This removes one of the biggest IHT advantages available and means many pension-heavy estates will need a rethink—possibly using trusts, gifting or adjusted drawdown.
4. Higher Taxes on Investment-Based Income
Taxes on dividends (from 2026) and on savings interest and rental income (from 2027) are all increasing.
For anyone using investment or rental income for gifting or trust planning, this may reduce flexibility—making forward planning more important.
The Old (But Still Very Important) Reasons to Review Your Planning
Legislation aside, there are several everyday life changes that should always trigger an estate planning review. Even the best-written Will or LPA can become outdated if your circumstances shift.
Here are the long-standing reasons I encourage clients to revisit their planning:
1. Changes in family circumstances
- Marriage, divorce or separation
- New children or grandchildren
- Death or illness of a beneficiary or executor
- Estranged or reconnected relationships
- Dependants becoming more or less financially independent
2. Changes in your assets
- Property sales or purchases
- Inheritance received
- Significant investment growth or losses
- Business changes—growth, sale, restructuring, or new partners
3. Changes to your intentions
- You may now want to protect assets from care fees
- You might prefer a trust structure rather than outright gifts
- You may wish to treat beneficiaries differently than before
- Your executors or attorneys may no longer be the right people
4. Your documents may simply be out of date
Many clients are surprised at how quickly time passes. Even a Will that “still feels recent” can be 8–10 years old. Older documents might:
- Refer to outdated laws
- Lack modern safeguarding clauses
- Say nothing about digital assets
- No longer reflect your wishes
- Be physically damaged or unsigned copies
5. LPAs go out of date too
Although LPAs don’t expire, banks and financial institutions prefer documents that are current and reflect your present circumstances. Outdated attorneys, changed contact details or altered medical wishes are all reasons to refresh them.
Why a Review Now Makes Sense
Between the Budget changes coming in over the next two years and the everyday life events that change our priorities, 2025–2027 will be a period of significant impact on many families’ estates.
A review doesn’t always mean rewriting everything. Sometimes it’s simply updating a clause, adding a trust, or adjusting who benefits and when. But catching issues early can save your family thousands in tax, stress and complicationsContact later on.
If you’d like me to take a look at your current Will, LPAs or inheritance planning—whether I drafted them originally or not—just get in touch. I’m always happy to offer a straightforward, no-pressure review.
Contact or call 01323 766 766