With UK economic growth slowing to 0.3 per cent in Q2, business confidence is seemingly fragile, and an impending Autumn Budget on 26 November is amplifying concerns.
With a £50 billion shortfall to manage, the Chancellor could well unveil a range of tax-raising measures as a means to generate extra revenue.
Speculation, and the unknown is, unfortunately, what makes planning investment, recruitment and payroll increasingly challenging, and tendencies towards short-term recruitment strategies in some industries, delayed investment and kerbed consumer spending reflects this.
However, reducing risk and the impact on your operations is still possible with some forethought.
What reforms are being talked about vs. what do we know is coming?
Recent reports suggest that we could see reforms to Capital Gains Tax (CGT), pensions, property taxes, and even VAT, but Inheritance Tax (IHT) – and gifting in particular – remains a likely avenue with a number of detailed ideas circulating in the press.
We already know that from April 2026 a new £1 million allowance will apply to the combined value of property that qualifies for 100% business property relief or 100% agricultural property relief or both.
This will also apply to any failed potentially exempt transfers made after 30 October 2024. Any unused £1m relief is not available for spousal transfer.
After the £1 million allowance has been exhausted, relief will apply at a lower rate of 50% to the combined value of qualifying agricultural and business property.
In addition, the rate of business property relief available will be reduced from 100% to 50% in all circumstances for shares admitted to trading on a recognised stock exchange which are not ‘listed’.
Beyond next year, we also know that from April 2027, unused pension pots will be brought into a person’s estate for the purposes of calculating IHT.
Already, we are seeing many people wanting to proactively reassess their tax strategies as a result of these reforms, and to plan accordingly.
How can I mitigate my IHT bill?
We cannot say for certain what the Chancellor will announce in November but, if you are at all concerned about vulnerabilities in your existing tax strategies, now is the time to review your plans.
A good place to start is to quantify your estate so that you know what may end up being exposed, should the rules change.
For pensions in particular, consider how the 2027 change could shift the tax burden and whether drawing income or adjusting death benefits fits your intentions.
Whatever the Chancellor decides, we are ready to help you review and restructure your assets to remain as tax-efficient as possible.
To talk to our team of tax experts about tailored Inheritance Tax planning, the changes to the rules around pensions, or your concerns about the upcoming Autumn Budget, contact us today.
