Financial Planner

Samuel Back

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The lead-up to the 26 November Budget <a href="https://www.aventur.co.uk/blog/autumn-budget-2025-key-predictions">was dominated by speculation</a>, leaks, political manoeuvring and warnings from <a href="https://www.gov.uk/government/organisations/hm-treasury">Chancellor Rachel Reeves’ emergency press conference</a> on 4th November, that repairing the UK’s public finances would require “contribution” from everyone.&nbsp; &nbsp;Yet by the time the speech arrived, much of the detail had already been released, and <a href="https://obr.uk/forecasts-in-depth/the-economy-forecast/">the Office for Budget Responsibility (OBR) painted a more nuanced picture</a> than her pre-Budget rhetoric suggested. &nbsp;The Chancellor faced two critical tests: &nbsp;<ol><li>Meeting her fiscal rules by balancing the current budget in the 2029/30 tax year &nbsp;</li><li>Delivering tax rises now to avoid repeated fiscal tightening later in the parliament</li></ol> A logical political move – better to front-load the pain rather than keep returning to the electorate to ask for more. &nbsp;Reeves largely met both objectives through a <a href="https://www.gov.uk/government/publications/autumn-budget-2025">£26bn package of tax increases</a>. A broad, sometimes patchwork set of measures designed primarily to stabilise the Treasury’s position. Markets responded calmly, with sterling steady and gilt yields contained, offering the government a crucial early win. &nbsp;However, within the financial sector and business community, the reaction was less positive. The combination of frozen thresholds, reduced pension incentives, higher taxes on unearned income, and the introduction of a new wealth-based charges mark a noticeable shift in the UK’s tax landscape.&nbsp; &nbsp;These decisions appear more focused toward closing the fiscal gap than on addressing deeper underlying structural challenges of the UK economy, like low productivity growth, demographic pressures, and chronic infrastructure underinvestment. &nbsp;The key question now is whether this Budget goes far enough to prevent further tax rises over the next few years.&nbsp;The Institute for Fiscal Studies has already noted that the Chancellor's fiscal headroom, while improved from the £4.2 billion originally forecast, remains relatively modest by historical standards. &nbsp;Politically, the fortunes of both the Chancellor and Prime Minister are now tightly tied to the success of these decisions.&nbsp; &nbsp;As one Labour MP noted, "If she goes, he goes”, creating a strong incentive for the government to avoid returning to voters for additional tax rises - but whether economic reality will permit such political manoeuvring remains to be seen. &nbsp;<h2>1. Fiscal Drag Accelerates &nbsp;</h2>Announcement &nbsp;<a href="https://www.gov.uk/income-tax-rates">Personal tax thresholds will remain frozen until April 2031</a>, extended from previous deadline of 2028. &nbsp;Impact &nbsp;This is one of the most significant, yet least visible tax rises in this Budget. As wages increase, more people are pushed into higher tax bands despite no change in headline rates.&nbsp;The impact is particularly acute for those crossing key thresholds. Individuals earning around £100,000 face an eye-watering marginal tax rate as their <a href="https://www.gov.uk/income-tax/personal-allowances-tax-credits-and-when-you-start-paying">personal allowance tapers away between £100,000 and £125,140</a> - even higher for those repaying student loans.&nbsp;This threshold freeze means more households will be pulled into this trap with each pay rise or promotion. &nbsp;Additionally, the £100,000 threshold for losing <a href="https://www.gov.uk/30-hours-free-childcare">30 hours of free childcare</a> remains unchanged, creating a substantial financial penalty for families with young children where one parent's income approaches this level. &nbsp;Planning&nbsp;Those nearing the £100,000–£125,140 band should consider strategies that reduce adjusted net income, including pension contributions and salary sacrifice, while these remain attractive and before April 2029. &nbsp;<h2>2. A Targeted Tax Rise on Unearned Income</h2>&nbsp;<h3>Savings Interest</h3>&nbsp;Announcement&nbsp;From April 2026, <a href="https://www.gov.uk/apply-tax-free-interest-on-savings">tax on cash interest rises by 2 percentage points across all bands.</a>&nbsp;<ol><li>Basic rate from 20% to 22% &nbsp;</li><li>Higher rate from 40% to 42% &nbsp;</li><li>Additional rate from 45% to 47% &nbsp;</li></ol>Impact &nbsp;Savers with large cash balances, a&nbsp;higher-rate taxpayer with £100,000 earning 4% interest will see their annual tax bill rise from £1,600 to £1,680 – a 5% increase in effective taxation. The impact compounds over time and across larger balances.&nbsp;Planning &nbsp;Individuals should consider repositioning cash holdings into tax-efficient structures: &nbsp;<ul><li>Maximising ISA allowances before April 2027, allocating the full £20,000 annual allowance to cash &nbsp;</li><li>Premium Bonds are another attractive option, with the ability to hold up to £50,000, given the tax-free treatment of the prizes &nbsp;</li><li>UK government bonds (GILTs) provide secure returns along with the advantage of tax-free capital gains &nbsp;</li><li>Investment bonds are designed to allow tax-deferred growth, helping to manage the tax liabilities on returns&nbsp; &nbsp;</li></ul><h3>Dividend Income &nbsp;</h3>Announcement &nbsp;<a href="https://www.gov.uk/tax-on-dividends">Dividend tax will also increase by 2%</a> for Basic and Higher rates from April 2026, with the additional rate and £500 dividend allowance remaining unchanged. &nbsp;Impact&nbsp;This change significantly affects business owners extracting profits via dividends, and investors holding shares outside tax-sheltered accounts.&nbsp; Pensions and ISAs remain unchanged, but those relying on dividend income from personal portfolios or extracting profits from owner-managed businesses will see increased tax costs. For business owners, the traditional low salary / high dividend split becomes less advantageous.&nbsp;&nbsp;Planning&nbsp;<ul><li>Review salary vs. dividend mix &nbsp;</li><li>Where income currently being paid as dividends isn’t required for day-to-day living costs, pension contributions represent a great method for profit extraction &nbsp;</li><li>Move taxable investments into tax shelters where possible, such as pensions, ISAs and bond &nbsp;</li></ul><h2>3. ISA Restrictions and Reduced Tax Efficiency &nbsp;</h2>Announcement &nbsp;From April 2027, the Cash ISA allowance for under-65s falls to £12,000 from the current £20,000. A review of Lifetime ISAs (LISAs) is due in 2026, possibly to be replaced by a first-time buyer focused product. &nbsp;Impact&nbsp;Higher tax on cash arrives in 2026, followed by reduced tax sheltering in 2027, indicating a clear policy push towards investment over cash savings. This will also create a challenging environment for risk-averse savers and those with large cash reserves. &nbsp;Planning &nbsp;<ul><li>Use the full £20,000 ISA allowances in both 2025/26 and 2026/27 &nbsp;</li><li>Position known short-term spending (e.g., house moves) into ISAs before restrictions come into effect &nbsp;</li><li>Review emergency fund structure (Cash ISA vs Premium Bonds)&nbsp; &nbsp;</li><li>Under-40s should consider opening a LISA now, even with minimal funding &nbsp;</li></ul><h2>4. Salary Sacrifice Restrictions (But a Window of Opportunity) &nbsp;</h2>Announcement &nbsp;From April 2029, <a href="https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye">salary sacrifice pension contributions above £2,000</a> per year will incur NI charges.&nbsp;Employees will pay NI at 8% on earnings below £50,270 and 2% above. Employers will also lose their NI exemption on these contributions. &nbsp;Impact &nbsp;This fundamentally affects key planning strategies for high earners — especially those between £100,000 and £125,140 who currently benefit from large effective tax relief.&nbsp; Employers may also be less willing to offer enhanced pension arrangements after the rule change. &nbsp;Planning (Before April 2029) &nbsp;<ul><li>Maximise pension contributions (up to £60,000 annually) &nbsp;</li><li>Use ‘<a href="https://www.gov.uk/tax-on-your-private-pension/annual-allowance#carry-forward">carry-forward</a>’ allowances from the last 3 years &nbsp;</li><li>Sacrifice bonuses where possible and&nbsp;especially tax-efficient for those in the £100,000-£125,140 band, effectively providing 62% tax relief (or higher with student loan repayments) &nbsp;</li><li>Parents can use sacrifice to stay below the £100,000 government childcare support cut-off &nbsp;</li></ul>Even post-2029, salary sacrifice still provides valuable tax relief, just at a reduced level &nbsp;<h2>5. Venture Capital Trust (VCT) Relief Reduced &nbsp;</h2>Announcement &nbsp;<a href="https://www.gov.uk/government/publications/venture-capital-trusts">Income tax relief on VCTs will drop from 30% to 20% in April 2026</a>,&nbsp;reducing these below Enterprise Investment Scheme (EIS) relief levels. &nbsp;Impact &nbsp;VCTs become less attractive from a pure tax relief perspective. It is important to note the remaining (and significant!) benefits: &nbsp;<ul><li>Tax-free dividends (particularly valuable given the dividend tax increase) &nbsp;</li><li>Tax-free capital gains &nbsp;</li><li>Diversified exposure to early-stage UK companies &nbsp;</li></ul>Planning &nbsp;<ul><li>Before change: Consider investing in VCTs before April 2026 to secure the higher relief &nbsp;</li><li>After change:&nbsp;VCTs against EIS opportunities on a risk-adjusted basis with both offering 20% upfront relief but different risk/return profiles&nbsp; &nbsp;</li><li>Reminder: both remain higher-risk investments and should only form a small portion of a diversified portfolio &nbsp;</li></ul><h2>6. The New Mansion Tax &nbsp;</h2>Announcement &nbsp;From April 2026 an annual wealth charge will apply to residential properties valued: &nbsp;<ul><li>£2–5m: £2,500/year &nbsp;</li><li>Over £5m: £7,500/year &nbsp;</li></ul>Impact &nbsp;Though relatively small in percentage terms, this marks the UK’s first explicit modern wealth tax. &nbsp;Asset-rich but cash-poor households may feel cashflow pressure, and houses near the £2m and £5m thresholds may see price pressures as buyers seek to avoid crossing these thresholds. &nbsp;Planning &nbsp;<ul><li>Review ownership structures &nbsp;</li><li>Plan liquidity for ongoing charges &nbsp;</li><li>Factor the tax into future property purchase decisions &nbsp;</li><li>Buy-to-let investors should revisit the viability of high-value holdings &nbsp;</li></ul><h2>7. Inheritance Tax (IHT) Freeze Continues &nbsp;</h2>Announcement &nbsp;<a href="https://www.gov.uk/inheritance-tax">The IHT nil-rate band remains frozen</a> at £325,000 until April 2031.&nbsp;Combined previously announced plans to include pension assets in estates from April 2027, this represents a continuation of fiscal drag in estate taxation. &nbsp;Impact &nbsp;More estates will fall into the IHT net due to asset growth. Positively, it was confirmed that<a href="https://www.gov.uk/business-relief-inheritance-tax"> business relief allowances</a> can now transfer between spouses upon death, creating up to £2m of combined relief. &nbsp;Planning &nbsp;Begin IHT planning earlier and more proactively by: &nbsp;<ul><li>Reviewing projected IHT liabilities, including pensions, from 2027 &nbsp;</li><li>Considering lifetime gifting strategies to take advantage of annual exemptions &nbsp;</li><li style="text-align:justify;">Ensuring business relief eligibility is properly structured and documented for business owners &nbsp;</li><li>Considering trust structures for asset protection and IHT mitigation &nbsp;</li><li>Remembering whole-of-life insurance in trust remain reliable tools &nbsp;</li></ul><h2>What Happens Next? &nbsp;</h2>These changes provide advance warning to the future. Those who act strategically over the next 12-48 months can extract substantially more value than those who wait until implementation dates arrive. &nbsp;As more technical details emerge, additional guidance will likely follow. If you want to understand how these changes may impact your personal finances, particularly around pensions, property, or investment structures, <a href="https://www.aventur.co.uk/contact">our advisers can help you</a> model your options. &nbsp;<hr>* This article is for informational guidance only and does not constitute personalised tax advice, legal advice, or a recommendation to act. It is based on Aventur Wealth’s interpretation of current UK legislation and HM Revenue &amp; Customs practice, which is subject to change.The value of any tax relief depends on your individual circumstances. We strongly recommend seeking professional tax consultation before making any decisions. Note that the value of investments can go down as well as up and you are not guaranteed to get all your capital back. Information is correct at time of publishing. Aventur is not responsible for the content of 3rd party websites.

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Autumn Budget 2025: What does it Mean for Your Money?

As the next UK’s Annual Autumn Budget approaches, speculation and predictions have increasingly captured the attention of both the media and the public.&nbsp; &nbsp;Whether you're planning to buy your next home or saving up for retirement, the upcoming changes will most likely affect you in some way. &nbsp;There has been a lot of talk around pension, ISAs, and tax changes, and we will aim to unpack these as simply as possible in this article. &nbsp;Scheduled for 26th November, this year’s budget needs to account for not only the government’s pledges, but also for internal and external circumstances, including fiscal pressures, slowing economic growth, rising living costs, and the impacts of international market volatility.&nbsp; &nbsp;Rachel Reeves, however, has made assurances that she will be making ‘the necessary choices to deliver strong economic foundations’. &nbsp;<h2>Why This Budget Matters &nbsp;</h2>The UK’s public finances remain under significant pressure, with borrowing and debt levels elevated.&nbsp; In the six months to September 2025, public sector borrowing increased in comparison to the same period in 2024 by around £11.5bn. For September alone, net borrowing hit £20.2bn - &nbsp;the highest September figure since the pandemic.&nbsp;This combination of continued large budget deficits and a debt burden leaves the Chancellor with little room for manoeuvre. Even modest downward revisions in growth forecasts or upward surprises in interest costs will force hard choices.&nbsp; To compound this, the Government’s own framework explicitly aims for debt to fall as a share of GDP, and for day-to-day spending to be contained. In terms of what this means for the budget, in practice this means that either tax rises, spending cuts or a combination thereof are increasingly inevitable. &nbsp;<h2>Pensions: What changes are being rumoured? &nbsp;</h2>With pensions having been subject to a substantial tax raid in the 2024 Autumn Budget, it would seem to be an interesting decision to make further changes to the pension regime.&nbsp; &nbsp;However, there are continued rumours of there being some overhaul to restrict the tax relief available.&nbsp; &nbsp;A significant portion of the benefit is channels to high earners which, based on the messaging and policy that's been put into place so far, seems like an area of the working population that the government is happy to target to look to close the budget deficit. Primary rumours suggest a limitation of the pension commencement lump sum, and also a cap on salary sacrifice.<h3> Could Tax-Free Lump Sums Be Limited?</h3> In what seems to be a perpetual rumour, there is again to talk of limiting the lump sum available.&nbsp; Currently, most people can take 25% of the value of their pension scheme tax-free at retirement age, with the current cap on this being £268,275.&nbsp; There has been speculation around this, but Reeves has largely discounted this thus far.&nbsp;<h3> Salary Sacrifice: Why a New Cap Is Being Discussed</h3> Salary sacrifice provides a particularly tax efficient mechanism for moving funds into a pension scheme.&nbsp; This means that employees and employers don't have to pay national insurance which isn't recoverable via pension contributions.&nbsp; If a salary sacrifice limit were put into place, with figures as low as £2,000 being talked about currently, then this would reduce the amount of money that employees can channel into their pension funds to mitigate income tax and national insurance contributions owed on the funds. &nbsp;<h2>ISAs: Will the Annual Allowance Be Cut?</h2> ISAs are a staple of people’s finances in the UK and are one of the few simple tax-shelters for hard earned savings.&nbsp; They are particularly attractive as they allow people to save money without paying income tax or capital gains tax on any interest and investment growth. Currently, the annual allowance is set at £20,000 per tax year. This amount, however, is rumoured to be lowered to £10,000 instead, representing a 50% decrease. &nbsp;<h3>Could Cash ISAs Be the Main Target?</h3>&nbsp;Some speculate this reduction will target cash ISAs rather than all ISA types, as Reeves aims to encourage investing over holding cash.&nbsp; &nbsp;Her aim is to ensure that the government ‘<a href="https://www.ajbell.co.uk/news/articles/press-uks-reeves-wants-right-balance-cash-isa-deposit-limits">gets the balance right</a>’ between cash and shares, and by encouraging investment rather than saving, the Treasury hopes to boost the UK’s capital markets. &nbsp;<h2>Inheritance Tax: Where Adjustments Could Happen Next &nbsp;</h2>It has already been announced that as of April 2027, <a href="https://www.gov.uk/government/publications/reforming-inheritance-tax-unused-pension-funds-and-death-benefits/inheritance-tax-on-unused-pension-funds-and-death-benefits">private pensions will also be subject to IHT</a>, meaning they are no longer an efficient way to pass on wealth.&nbsp; &nbsp;Considering the substantial contribution of IHT to the treasury’s tax take (approximately £6.7 billion in 22-23 tax year!), it could be an area targeted for additional tax hikes. &nbsp;Whilst messaging appears to be vague around whether the government will backtrack on the promise to avoid tax raids on working people, increasing the IHT burden faced by wealthier individuals (and decreasing the threshold at which people are ‘wealthy’ enough to pay IHT!) could be the most appealing of an overall unappealing set of options. &nbsp;The two primary areas potentially on the table to be impacted are an extension of the 7-year gifting rule and a cap on the amount of gifts people can make over their lifetime. &nbsp;<h3>Extending the 7-Year Gift Rule &nbsp;</h3>Currently, dependent on the gift donor outliving the 7-year period from the date the gift is given, a gift made will fall out of the donor's estate, therefore, is completely exempt from IHT. &nbsp;Should the gift donor not survive the full 7-year period, the gift will remain within their estate and will be subject to IHT.&nbsp; &nbsp;However, the tax payable on the gift may be reduced due to taper relief, which applies to the 3-to-7-year period after the gift was given. The below shows this: &nbsp;<img class="image_resized" style="width:99%;" src="https://aventur-strapi-prod.s3.eu-west-2.amazonaws.com/image_12_a3454d3eaf.png" alt="A graph showing"> The gifting mechanism is a component of most IHT strategies, and therefore by increasing the amount of time it takes for a gift to leave the estate would increase the tax take substantially.<h3> Setting a Lifetime Cap on Gifts</h3> Another potential rule change that would have a significant impact would be the implementation of a lifetime cap on gifts.&nbsp; This is something that can be seen globally, with a cap on lifetime gifts in the US (albeit a much more generous figure at c. $13.99m!). This is unified with the estate tax exemption, meaning that gifts made in a lifetime can reduce the amount that can be passed on tax-free after death. This would mean that gifts would become reportable and potentially the amount that could be passed on to individuals without being subject to lifetime tax charges could be reduced.&nbsp; There is currently a ruleset in place for Chargeable Lifetime Transfers (CLT) that caps gifts to discretionary trusts to the available nil-rate band (NRB), effectively capping this at £325,000 per person in a 7-year period without a 20% charge applying. A similar ruleset could very well be extended to gifts to individuals.<h2> Income Tax and National Insurance (NI): What Might Change?</h2> Despite pledging not to touch income tax or employee national insurance (NI), some speculation has been made around increasing these. On the one hand, the independent think-tank Resolution Foundation has proposed a <a href="https://www.resolutionfoundation.org/app/uploads/2025/09/Call-of-duties.pdf">2p increase in income tax and a 2p decrease in employee NI</a>, aiming to protect the working class and target pensioners and landlords - two areas that would fall outside of the ‘working people’ manifesto pledge, and are traditionally seen as wealthier segments of the UK population.<h3> Could NI Be Added to Rental Income?</h3> There have also been some discussions on adding NI to rental income from landlords, which could potentially <a href="https://www.which.co.uk/news/article/autumn-budget-2025-when-it-is-and-what-will-it-contain-aZm9i8u75S5h">raise approximately £2.3bn a year</a>.&nbsp; This would further hurt landlords who have been impacted by greater protections being available for tenants as part of the <a href="https://www.gov.uk/government/publications/guide-to-the-renters-rights-act/guide-to-the-renters-rights-act">Renters’ Rights Act</a>.<h2> Whatever Happens Next, We’ll Help You Navigate It</h2> Whatever the new Chancellor has in store for this budget, we’ll be ready to analyse and dissect what any changes may mean for you and your finances. If you have any queries relating to your finances before the budget, or if you’d like to be among the first to receive our analysis of the budget, you can <a href="https://www.aventur.co.uk/contact">contact our team</a>. &nbsp;<hr>*Information correct at the time of publishing. This article is provided for information purposes only and should not be taken as individual advice. Aventur is not responsible for the content of 3rd party websites.

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Autumn Budget 2025 Key Predictions

Aventur Team

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The <a href="https://www.aventur.co.uk/blog/autumn-budget-key-points-how-will-your-finances-be-affected">2024 Autumn Budget </a>saw a range of changes to Inheritance Tax (IHT) announced, a move which has, and will surely continue to cause controversy until it’s implementation. &nbsp;The new guidelines may mean that some people will have to reconsider their existing Estate Planning as many carefully made plans under the old rules will be impacted. &nbsp;So, what are some of the things that can be done in the meantime to help individuals prepare for the upcoming changes? Let’s find out below. &nbsp;<h2>An introduction to Inhertiance Tax (IHT) &nbsp;</h2><h3>What is IHT?</h3> IHT is a tax that you might have to pay when you pass away. It can also apply to certain financial gifts you give while you're still alive. &nbsp;You’ll usually owe IHT if the value of everything you own when you die (your estate) is more than a certain amount called the <a href="https://www.gov.uk/government/publications/inheritance-tax-nil-rate-band-and-residence-nil-rate-bands-from-6-april-2028/inheritance-tax-nil-rate-band-residence-nil-rate-band-from-6-april-2028">'nil rate band</a>', which is currently £325,000, by default. &nbsp;However, the actual amount can vary based on your situation. If your estate is worth more than the nil rate band, the excess can be taxed at 40%. &nbsp;<h3>What's included in your estate? &nbsp;</h3>For most in the UK, your estate includes all the things you own worldwide like your home, any properties you rent out, cars, savings, investments, and personal belongings. &nbsp;It also considers financial gifts you gave within seven years before your death, and any debts you owe will reduce the value of your estate. &nbsp;<h3>What allowances does my estate have? &nbsp;</h3>Allowances that you will be entitled to include:&nbsp;<ul><li><a href="https://www.gov.uk/government/publications/inheritance-tax-nil-rate-band-and-residence-nil-rate-bands-from-6-april-2028/inheritance-tax-nil-rate-band-residence-nil-rate-band-from-6-april-2028">Your own nil rate band</a>: This is currently £325,000 and remains fixed until April 2028. Gifts made in the seven years before your death use this first. &nbsp;</li><li><a href="https://www.gov.uk/guidance/transferring-unused-basic-threshold-for-inheritance-tax">Transferable nil rate band</a>: If your spouse or civil partner died before you, you can use their unused nil rate band, potentially doubling it to £650,000. &nbsp;</li><li><a href="https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band">Residence nil rate band</a>: If your family home goes to direct descendants, you can claim an additional £175,000 nil rate band. This can also be transferred from a deceased spouse or civil partner. &nbsp;</li></ul><h3>What about if I give my money away when I’m alive? &nbsp;</h3>Making gifts during your lifetime can reduce your IHT bill. Generally, gifts made more than seven years before your death aren't included in your estate. &nbsp;<h3>How is IHT calculated? &nbsp;</h3>Upon death, your estate's value is determined by adding up all your assets and subtracting any debts. Certain gifts made within seven years before death are also considered. There's no IHT on money left to your spouse/civil partner or donated to charity.&nbsp; &nbsp;Business property relief and agricultural property relief can also reduce IHT for certain assets. If the total assets not covered by these exemptions exceed the nil rate bands, IHT is charged at 40%. The order in which gifts were made also affects the use of the nil rate band. &nbsp;<h2>What IHT changes were in the Budget? &nbsp;</h2><h3>Defined contribution pensions liable for IHT</h3>&nbsp;In the 2024 Autumn Budget, it was announced that from April 2027, defined contribution (DC) pensions (and potentially some defined benefit pensions as well) will no longer be exempt from IHT.&nbsp;&nbsp;This could add a significant amount of additional IHT liability to estates who fall under the new rules.&nbsp;For example, any estates over the IHT threshold with a Defined Contribution pension balance of £500,000, could be in line for an additional IHT bill of £200,000.&nbsp;&nbsp;Anything passing to spouses will remain exempt, but the option of passing these assets down the generations free of IHT, has been removed.&nbsp;These changes in the budget will undoubtedly have an impact on how people approach IHT planning. In future, pension funds won’t be as an attractive a vehicle for IHT planning as they have been. Instead, releasing pension funds to spend or gift is now a much more attractive option.&nbsp;&nbsp;<h3>New caps introduced for Business relief and Agricultural relief.</h3>&nbsp;Agricultural property and Business relief (BR) have previously benefitted from up to 100% relief from IHT.&nbsp;&nbsp;Assets that fall under these regimes include family farms and businesses, plus a range of investment products specifically created to take advantage of the exemption.&nbsp;&nbsp;This relief was introduced to ensure that, if a business owner dies, the business isn’t jeopardised by a large IHT bill.&nbsp;As of April 2026, IHT will be charged on combined business and agricultural property worth over £1 million at half of the normal 40% rate. This creates an effective IHT rate of 20% for any amount over £1 million.&nbsp;&nbsp;This could have very damaging consequences for businesses and farms, particularly where the business or farm has a high value but there aren’t sufficient non-business assets to cover the IHT bill.&nbsp;&nbsp;Executors will have to find the funds to pay the tax from somewhere which could result in businesses being sold off to fund the IHT.&nbsp;<h3>AIM shares also lose 100% exemption</h3>&nbsp;This effective tax rate of 20% will also extend to Alternative Investment Market (AIM), which were previously exempt from IHT if held for at least two years at the time of death.&nbsp;These have been a popular investment option, which can be held inside an ISA, for those who wish to reduce their exposure to IHT, as their investments receive full IHT relief after two years (which is much quicker than the seven years required for gifts), and the investor still owns the assets (unlike with a gift). From April 2026 these investments will be subject to 20% IHT.&nbsp;&nbsp;The notable difference between AIM shares and BR and Agricultural relief is that AIM shares will not be eligible for the £1 million tax free threshold.&nbsp;<h3>IHT threshold freeze extended to 2030</h3>&nbsp;Finally, a great example of Fiscal drag!&nbsp;The current nil rate band of £325,000 and residence nil rate band of £175,000 will be frozen until 2030, and has been stuck at £325,000 since 2009, which in real terms, means it will have been reducing with inflation for 21 years by 2030.&nbsp;<h2>What can I do about IHT?</h2>&nbsp;There are a number of options individuals have in light of the announced changes to IHT. These include:&nbsp;<ul><li>Do Nothing -&nbsp;You may choose not to take any specific action. While this approach is straightforward, it often results in a substantial IHT liability, potentially reducing the amount passed to beneficiaries.&nbsp; It depends if choosing to pay money to HMRC is acceptable to you! &nbsp;</li><li>Spend Your Money -&nbsp;Spending can be the most enjoyable way to reduce your IHT liability and for most clients, happens naturally throughout retirement.&nbsp; However, for clients who want to leave legacy for their family or have a sizable estate, this option alone may not be a solution. &nbsp;</li><li>Lifetime Gifting -&nbsp;Gifting assets during your lifetime can significantly reduce IHT liability, especially if done with clear planning and an understanding of future financial needs.&nbsp; By working with your financial planner to determine the necessary capital for your own retirement, you can make gifts confidently, allowing you to see your family to enjoy some of the money you have worked hard to accumulate. &nbsp;</li><li>Will Planning -&nbsp;Ensuring that Wills are updated and correctly structured is essential. This allows for certain allowances and reliefs to be utilised, ensuring that assets are passed on as tax-efficiently as possible.&nbsp; &nbsp;</li><li>Insuring the IHT Liability -&nbsp;Insurance can sometimes be used to cover IHT liabilities, especially for clients with valuable assets that are not easily liquidated (such as property or business assets).&nbsp; However, it’s not for everyone - insurance premiums can be costly. This strategy &nbsp;can be more suited as either a temporary solution or for clients with less liquid estates. &nbsp;</li><li>Using Trusts -&nbsp;Trusts offer a flexible approach to estate planning and can help preserve wealth across generations.&nbsp; Various trust structures can be integrated into a gifting strategy to provide a lasting legacy while potentially reducing IHT liability. It’s important to take expert advice on trusts given the complexities. &nbsp;</li><li>Tax-Efficient Investing - Whilst facing some restrictions following the budget, certain investments may qualify for Business Property Relief (BPR), exempting them from some (or all!) of the IHT liability if held at the time of passing.&nbsp; For example, investments in qualifying trading companies can allow clients to maintain access to their capital while benefiting from IHT relief.&nbsp;</li></ul>&nbsp;<h2>Conclusion</h2>&nbsp;The 2024 Autumn Budget introduced significant changes to inheritance tax that will fundamentally reshape estate planning strategies.&nbsp;&nbsp;With the removal of IHT exemptions for defined contribution pensions, the introduction of new caps on business and agricultural relief, and the continued freeze of the nil rate band, individuals looking at an IHT liability must now take a proactive approach to managing their estate.&nbsp;It’s well worth considering your approach to estate planning, including:&nbsp;<ul><li>Revisiting your strategy with your financial planner &nbsp;</li><li>Strategic lifetime gifting &nbsp;</li><li>Updating wills &nbsp;</li><li>Exploring trust structures &nbsp;</li><li>Considering tax-efficient investment options</li></ul>&nbsp;The complexity of these changes underscores the importance of personalised, forward-looking estate planning. For help in planning your estate to account for these changes, <a href="https://www.aventur.co.uk/contact">get in touch with our team</a> today. &nbsp;<hr>*The Financial Conduct Authority does not regulate Inheritance Tax Planning or Estate Planning. Information correct at time of publishing.

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How will New Inheritance Tax Rules Affect your Estate Planning?

Estate planning involves deciding how to distribute assets after your death. It can be complex, but it's important to have one in place to ensure that your wishes are respected, and your loved ones are taken care of. &nbsp;You can use this article as your guide to estate planning, as it provides an overview of the process. &nbsp;<h2>Why is estate planning important? &nbsp;</h2>There are several reasons why estate planning is important: &nbsp;<ul><li>To ensure that you split your assets according to your wishes. If you die without a will, your assets will be distributed according to government guidelines. These guidelines may not be in line with your wishes. &nbsp;</li><li>To minimise inheritance tax (IHT). Individuals pay IHT on the value of an estate above a certain threshold. Estate planning can help to reduce the amount of inheritance tax that your loved ones have to pay. &nbsp;</li><li>To protect your loved ones from financial hardship. Estate planning can secure the financial future of your young children or dependent relatives after you pass away. &nbsp;</li><li>To choose someone to make decisions on your behalf if you become unable to. If you are unable to make decisions, estate planning ensures that you choose someone you trust to make decisions for you. &nbsp;</li></ul><h2>What does an estate plan include? &nbsp;</h2>Estate planning can involve a variety of different elements, including: &nbsp;<ul><li>Making a will.&nbsp;A will is a legal document that sets out your wishes for the distribution of your assets after your death. &nbsp;</li><li>Setting up a trust.&nbsp;A trust is a legal arrangement that means you can transfer ownership of your assets to a trustee. They will then manage your assets for the benefit of your beneficiaries. &nbsp;</li><li>Appointing a power of attorney.&nbsp;A power of attorney is a legal paper that lets someone make choices for you if you can't. &nbsp;</li><li>Appointing a healthcare proxy.&nbsp;A healthcare proxy lets someone make medical decisions for you if you can't make them yourself. &nbsp;</li><li>Purchasing life insurance.&nbsp;Life insurance can provide your loved ones with a financial payout after your death. &nbsp;</li></ul><h2>How to create an estate plan &nbsp;</h2>To create an estate plan, you should first take the time to consider your wishes. Ask yourself: What do you want to happen to your assets after your death? Who do you want to benefit from your estate? Once you have thought about this, you can start to put together your plan. &nbsp;It is important to seek professional advice when creating an estate plan. A solicitor or professional planner can help you to understanding your options and creating a personalised plan that meets your needs. &nbsp;<h2>Estate planning tips &nbsp;</h2>Here are some more estate planning tips if you're a UK resident: &nbsp;<ul><li>Make a will.&nbsp;Doing this is the most important thing you can do to ensure that you distribute your assets the way you want. &nbsp;</li><li>Consider setting up a trust.&nbsp;A trust can be a useful tool for protecting your assets and minimizing inheritance tax. &nbsp;</li><li>Appoint a power of attorney and a healthcare proxy.&nbsp;This will ensure that someone you trust is able to make decisions on your behalf if you become unable. &nbsp;</li><li>Purchase life insurance.&nbsp;This can provide your loved ones with a financial pay-out after your death. &nbsp;</li><li>Keep your estate plan up to date.&nbsp;You should regularly review your plan to ensure it reflects your current wishes and circumstances. &nbsp;</li></ul><h2>Inheritance tax &nbsp;</h2>The current inheritance tax threshold is £325,000. If your estate is worth more than this, your beneficiaries must pay inheritance tax on the excess amount. &nbsp;There are a number of ways to reduce inheritance tax liability, such as setting up a trust or making charitable gifts. If you are concerned about inheritance tax, read our <a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">Guide to Inheritance Tax</a>. &nbsp;<h2>Conclusion &nbsp;</h2>Proper estate planning ensures the distribution of your assets according to your wishes. If you don't have a plan, you can make one yourself or get help from a professional to create one.&nbsp; Our team are experienced in creating estate plans for all eventualities, if you'd like some help in creating yours, <a href="https://www.aventur.co.uk/contact">get in touch</a>. &nbsp;<hr>* Some forms of Estate Planning are not regulated by the FCA. Information correct at the time of publishing.

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Your Essential Guide to Estate Planning

Inheritance tax (IHT) is a complex topic, but it's important to understand the basics so that you can plan for your estate and reduce the amount of IHT you have to pay. &nbsp;This article gives an overview of IHT, and provides examples of what you, or your loved ones may be required to pay. &nbsp;<h2>What is inheritance tax? &nbsp;</h2>IHT is a tax on the estate of someone who has died, including all property, possessions, and money. The current <a href="https://www.gov.uk/inheritance-tax#:~:text=The%20standard%20Inheritance%20Tax%20rate,estate%20that's%20above%20the%20threshold.">standard IHT rate</a> is 40%. You only pay IHT on the part of your estate that's above the tax-free threshold, which is currently £325,000. &nbsp;You can read our <a href="https://www.aventur.co.uk/blog/your-guide-to-estate-planning">Guide to Estate Planning</a> to find out more about IHT and how you can prepare your estate. &nbsp;<h2>Who has to pay inheritance tax? &nbsp;</h2>Not everyone has to pay inheritance tax. If the value of your estate is below the £325,000 threshold, then you won't have to pay any IHT. &nbsp;However, if the value of your estate is above the threshold, then you may have to pay IHT on the part of your estate that's above the threshold. &nbsp;<h2>Who is exempt from inheritance tax? &nbsp;</h2>There are a number of people who are exempt from inheritance tax, including: &nbsp;<ul><li>Your spouse or civil partner &nbsp;</li><li>Charities &nbsp;</li><li>Community amateur sports clubs &nbsp;</li><li>Certain trusts</li></ul><h2>What are the IHT allowances?</h2> In addition to the £325,000 nil-rate band, there are a number of other allowances that can reduce the amount you have to pay. These include: &nbsp;<ul><li>The residence nil-rate band: This is an additional £125,000 allowance that can be used against the value of your main residence. &nbsp;</li><li>The agricultural property relief: This is a relief that can be claimed on the value of agricultural property. &nbsp;</li><li>The business property relief: This is a relief that can be claimed on the value of business property. &nbsp;</li><li>The rules around inheritance tax are complex and can change, so it is essential to stay up to date. &nbsp;</li></ul><h2>How is inheritance tax calculated? &nbsp;</h2><a href="https://www.aventur.co.uk/blog/inheritance-tax-what-you-need-to-know">Inheritance tax</a> is calculated by multiplying the value of the estate above the nil-rate band by the IHT rate. For example, if the value of your estate is £700,000 and you are not married or in a civil partnership, then you will have to pay IHT on £200,000 (£700,000 - £325,000 – £175,000).&nbsp; &nbsp;The current IHT rate is 40%, so you will have to pay £80,000 in IHT. This calculation includes the residential nil-rate band allowance. &nbsp;<h2>Ways to reduce inheritance tax</h2> There are a number of ways to reduce the amount of inheritance tax you have to pay. These include: &nbsp;<ul><li>Making gifts to your family and friends before you die. &nbsp;</li><li>Making a will and leaving your estate to your spouse or civil partner. &nbsp;</li><li>Using the residence nil-rate band and the agricultural property relief. &nbsp;</li><li>Setting up a trust. &nbsp;</li></ul><h2>Conclusion</h2>&nbsp;Your estate is a reflection of your life and your values, so it is important to plan for inheritance tax early. Through careful planning you can be prepared and reduce your IHT liability and ensure that your loved ones inherit your assets as intended. &nbsp;If you’re not sure where to start and want to understand your options, <a href="https://www.aventur.co.uk/contact">get in touch with our team</a> who can help you understand and make the right decisions for your estate. &nbsp;<hr>*The Financial Conduct Authority does not regulate Inheritance Tax Planning or Estate Planning. Information correct at time of publishing.

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Inheritance Tax: What You Need to Know

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Estate Planning