BUDGET INHERITANCE TAX WINNERS
Budget Tax Changes put a significant Emphasis on Succession Planning.
The 30th October 2024 Budget was an IHT nightmare for many. Business and farm owners are reeling from the announcement that from April 2026, IHT reliefs which had previously been unlimited, will be reduced to a £1million limit for full relief.
Any relief over the £1million limit will be halved from 40% to 20%. The focus in the last few months has been business owners and farmers urgently assessing their exit strategies and succession planning.
It was also announced that pension schemes will be within the scope of IHT from the 6th April 2027.
Most estate planners will have a very busy few months as clients want to reassess their current position and how these Budget announcements will impact on their IHT and succession planning.
Further challenges will face certain people as the concept of domicile with disappear from April 6th 2025. This will influence those seeking to leave the UK and escape the UK tax net with the introduction of the concept of a “long term resident” that essentially replaces the concept of domicile.
The long-term resident concept is defined as a person who has been resident in 10 out of the last 20 tax years. Most people who want to escape the IHT net will now have to leave the UK for at least 10 tax years.
For any estate planning and probate enquiries in Bexhill, Battle, Hastings, Rye and all East Sussex please get in touch.
From the tax year 2025/2026, this will be the only thing that matters for IHT purposes as the concept of domicile will be a thing of the past.
The impact of these changes might mean that many UK individuals will leave the UK permanently seeking to become non-resident for at least 10 tax years. Their domicile of origin won’t matter anymore, and they will fall out of the UK IHT net. Again, there may be an impact for those clients you have who might want to review their Wills and estate planning to reflect their desire to leave the UK.
The ‘winners’ will be a class of people who might welcome the new rules. These are individuals who are UK domiciled but have already been out the UK for many years. They can now return to the UK and not have to worry about IHT on non-UK assets for at least 10 years.
This message was added on Wednesday 12th March 2025
