10 Dec 2024

Carl Naudo, one of the advisers, gives us thoughts around the budget…

After many months of speculation about what the Chancellor may change, it has now been two weeks since she gave her much-anticipated budget. Having had the chance to let the dust settle and digest the changes, we now have a better view on how they will impact t our clients and the different strategies that may now be employed dependant on circumstances.

While I won’t go through every change, I will highlight some of the changes the Chancellor made on the 30th of October that could l impact most on our client’s.

Capital Gains Tax (CGT) rises

There were lots of rumours pre-budget about bringing CGT in line with income tax levels, but that didn’t happen. Instead, the lower rate of CGT will rise from 10% to 18% and higher rate increased from 20% to 24%. While not in line with income tax levels, this will certainly make people more mindful of any capital gains they make in future that are above the unchanged CGT exemption of £3,000 for individuals and £1,500 for Trusts. Ensuring you use your CGT exemption every year, reporting previous losses and considering spousal transfers will now be even more important now the tax burden is higher.

2nd home Stamp Duty Land Tax (SDLT)

Many people in the UK see property as the perfect investment solution, and looking at the historical gains in property we can all see why; however, successive governments continue to make moves to discourage this, or at least have a slice of the pie. It is easy for the government to collect this tax and they will increase additional property SDLT from 3 – 5% above the standard residential rates, further impacting the investor’s return.

Inheritance Tax (IHT) threshold freeze

The IHT thresholds were due to rise with inflation from April 2028, but the Chancellor has extended this freeze until 2030. As a reminder, the thresholds are as follows:

  • The Nil Rate Band (NRM) –           £325,000
  • The Residence Nil Rate Band (RNRB) –           £175,000

This is important to bear in mind when dealing with your estate planning as the freeze will mean many more estates could have an IHT liability.

IHT on pensions

During the budget, the Chancellor announced that she plans to bring pensions into estate valuations from 6 April 2027(subject to a short consultation period). For many years, pensions have sat outside of people’s estates, sheltered from IHT, but this change will mean considerably more people will be brought into the IHT bracket. As a result of these changes, there will need to be more consideration given towards estate planning and potentially choosing to take income from the pension sooner rather than later.

Business & Agricultural Property Relief

We also saw changes to Business & Agricultural Property Relief, which take effect from 6 April 2026. IHT Relief of up to 100% continues on Business & Agricultural Property up to £1m to protect family farms and businesses. It will reduce to 50% thereafter.

The government will also reduce the rate of business property relief available from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM.

In Conclusion

Looking back at the pre-budget speculation in the media, it might be tempting to say, “Well, that wasn’t too bad.” However, this budget will undoubtedly impact many clients’ financial plans.

Ultimately, our message is don’t panic, we have time to consider these changes for you personally and reinforce the importance of early financial planning.

The best way to mitigate many of these changes is to start planning as soon as possible, consistently applying small but effective strategies over time — like making full use of your IHT and CGT exemptions. By doing so, you’ll be better positioned to navigate these evolving financial landscapes. We look forward to working with you on creating your future plans.