Wills, Trusts & Estates · 2024 Budget
2024 Autumn Budget — What Changed for Inheritance Tax
The October 2024 Autumn Budget introduced the most significant changes to inheritance tax in a generation. If you have not reviewed your estate plan since October 2024, you may be significantly more exposed than you think.
We explain what changed, who is affected, and what planning options are available. Chester-based, acting across Cheshire, North Wales and England and Wales.
The four key changes
Inheritance tax threshold freeze extended to 2031
The nil rate band (£325,000) and residence nil rate band (£175,000) will remain frozen until at least 5 April 2031. These thresholds have not increased since 2009 and 2017 respectively. As property values and asset prices continue to rise, more estates are being drawn into the IHT net each year.
Nil rate band
£325,000
Frozen until 2031
Residence nil rate band
£175,000
Frozen until 2031
Max threshold (married couple)
£1,000,000
Passing to children
Who is affected: Anyone whose estate is approaching or exceeds £325,000 (single) or £650,000 (married couple). With rising property values, this now includes many middle-income families.
Agricultural & Business Property Relief — combined £2.5m cap from April 2026
From 6 April 2025, the scope of UK inheritance tax is determined by long-term UK residence rather than domicile. An individual who has been UK resident for at least 10 of the last 20 tax years is treated as a “long-term UK resident” and their worldwide assets are subject to IHT — regardless of where they were born or intend to retire.
Who is affected: Non-UK domiciled individuals who have lived in the UK for 10 or more years, and their spouses or civil partners. If you have assets outside the UK, this change may significantly increase your IHT exposure.
Residence-based IHT replaces domicile — from 6 April 2025
From 6 April 2025, the scope of UK inheritance tax is determined by long-term UK residence rather than domicile. An individual who has been UK resident for at least 10 of the last 20 tax years is treated as a “long-term UK resident” and their worldwide assets are subject to IHT — regardless of where they were born or intend to retire.
Who is affected: Non-UK domiciled individuals who have lived in the UK for 10 or more years, and their spouses or civil partners. If you have assets outside the UK, this change may significantly increase your IHT exposure.
Pensions brought into IHT from April 2027
From April 2027, unused pension funds will be brought into the scope of inheritance tax. Currently, defined contribution pensions and SIPPs sit outside your estate for IHT purposes — making them a highly tax-efficient way to pass wealth to the next generation. From 2027, this advantage will be significantly reduced.
The change applies to unused pension funds remaining at death. Pension income already drawn is not affected. The interaction between pension IHT and income tax on pension withdrawals is complex — we advise on the overall tax position.
Who is affected: Anyone with a significant defined contribution pension or SIPP who planned to pass it to the next generation. Planning now — including reviewing pension drawdown strategy — may reduce the impact.
Read more about estate planning for high earners →Common questions about the 2024 Budget changes
What did the 2024 Autumn Budget change about inheritance tax?
The October 2024 Autumn Budget made four significant changes: (1) the nil rate band and residence nil rate band will remain frozen until at least 5 April 2031; (2) Agricultural Property Relief and Business Property Relief will be subject to a combined £2.5 million cap at 100% relief from April 2026, with only 50% relief on the excess; (3) the IHT territorial scope changed from a domicile-based to a residence-based system from 6 April 2025; and (4) unused pension funds will be brought into the scope of IHT from April 2027.
Do I need to update my will because of the 2024 Budget?
If your estate includes agricultural land, business assets, or a significant pension pot, you should review your estate plan urgently. The changes to APR, BPR, and pension IHT may significantly increase your IHT liability — and there may be planning options available before the changes take effect.
Is there anything I can do before April 2026 to reduce my APR/BPR liability?
Yes. Lifetime gifts of qualifying agricultural or business assets may start the seven-year clock before the new rules take effect. Trust structures and other planning strategies may also be available. We advise on the options specific to your circumstances.
Will my pension be subject to inheritance tax from 2027?
Yes. From April 2027, unused pension funds will be brought into the scope of inheritance tax. If you have a significant pension pot, planning now — including reviewing pension drawdown strategy and lifetime gifting — may allow you to mitigate the impact.
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Don't wait for the rules to change.
Speak to a specialist about the impact of the 2024 Budget on your estate — and the planning options available before April 2026 and April 2027. Costs explained clearly before any work begins.
No obligation — talk through your options first. Chester, Cheshire & North Wales.
Request a free initial consultation
Tell us about your estate and we will explain the impact of the 2024 Budget changes and your planning options — no obligation, costs clear from the outset.