Autumn Budget 2025 — key changes for personal estate planning & administration

The 2025 Autumn Budget has ushered in a raft of important changes that will impact personal estate planning, trust administration and family finances. 

From the transferability of agricultural and business property relief to updates on inheritance tax bands, pension fund taxation and new policies on compensation schemes, property and savings, here Helen Dawson — a specialist private client solicitor in our Brabners Personal team — unpacks the headline measures and presents some practical steps that you can take to optimise your planning and protect your loved ones for the future.

Transferable Agricultural & Business Property Relief allowance

Along with the changes to Agricultural and Business Property Relief introduced in last year’s Budget (set to come into effect in April 2026) was the introduction of a £1m allowance that enabled the first £1m of relievable assets in a deceased person’s estate to pass 100% free of inheritance tax. Any fully relievable assets above £1m are to be effectively taxed at half the standard rate of inheritance tax from April next year. This allowance wasn’t transferable between spouses in the same way as the ordinary Nil Rate Band and Residence Nil Rate Band, meaning that families had a relatively short timeframe to proactively plan and make the most of the allowances available to them. 

Last week’s Budget changed this position, as Rachel Reeves confirmed that this allowance will be transferable between spouses and civil partners. This transferability will apply retrospectively, meaning that the allowances of spouses who died before 6 April 2026 can be applied to their widow or widower’s estates. This applies even if the first spouse to die didn’t own any assets that qualified for Business or Agricultural Property Relief. 

This is very welcome news and takes some of the immediate planning pressure off for farming and business families. However, it doesn’t take away the need for families to discuss and work out their succession plans together with trusted advisors.

Frozen Inheritance Tax Nil Rate Band

The ordinary Inheritance Tax Nil Rate Band — which applies to all estates and enables the first £325,000 of an estate to pass to any non-exempt beneficiaries free of tax — is frozen in value until 2031. 

This is disappointing, as the value of the allowance hasn’t changed since 2009 despite inflation and rising property prices.

Pension funds & inheritance tax payments

Last year’s Budget confirmed that the value of unused pensions would be taxed alongside the rest of a deceased person’s estate from April 2027. Personal Representatives of an estate were to be responsible for ensuring the correct tax applicable to each pension is paid, despite pensions falling outside of their control (as these are managed by pension trustees). This — coupled with the fact that a person can accumulate several pensions over a lifetime that are easily lost track of — potentially put Personal Representatives in a difficult position.

The 2025 Budget has changed the rules, so in the event that a further pension is discovered after an estate has been administered and clearance received from HMRC, the Personal Representatives won’t be responsible for settling the tax due in connection with that pension. 

Personal Representatives will also be able to request that pension administrators withhold 50% of taxable benefits for up to 15 months after a death, so that a fund is retained to pay inheritance tax due as and when the tax payable is established. Currently, the whole of a pension pot can be distributed to beneficiaries fairly shortly after a death, which could create issues when the tax payment falls due. 

While these adjustments will lift some of the administrative burden of the pension changes from Personal Representatives, private client advisors are still seeking further adjustments and clarification as to how the 2027 pension changes will be managed in practice. 

The infected blood compensation scheme

Rachel Reeves confirmed welcome changes to the infected blood compensation scheme. In cases where the original claimant has died, the first living person entitled to the payment will receive the funds tax free and be able to pass them on free of inheritance tax on death. They’ll also have two years from receiving the payment to gift some or all of the compensation free of inheritance tax.

This puts the many families affected by the infected blood scandal on a much more equal footing.

Other key changes to note

Tax on dividends

Will be increased by 2% on the ordinary and upper rate from April 2026.

Tax on property & savings income

Will be increased by 2% at basic, higher and additional rates from April 2027.

Capital Gains Tax Relief on sales of businesses to Employee Ownership Trusts

This has been reduced from 100% to 50% as of 26 November, which will of course have an immediate impact on some business owners’ succession planning. 

High value Council Tax surcharge

This will be introduced in England from April 2028 on residential properties valued over £2m. The charge starts at £2,500, rising to £7,500 per year for properties worth over £5m. This charge is to be levied by councils on owners, rather than occupiers. 

ISA cash limit of £12,000

Annual cash investments into ISAs will be capped at £12,000 of the ISA investment allowance of £20,000. This cap won’t apply to those over 65.

Talk to us

Want to know more about how the Budget will affect you and your family? Our award-winning advisors can empower you to make informed and strategic decisions about your life, estate and future.

Talk to us by giving us a call on 0333 004 4488, sending us an email at privateclient@brabners.com or completing our contact form below.

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