What the 2024 Budget means for you

The Autumn Budget 2024 has introduced significant changes to taxes and financial allowances, with a £40bn tax hike to support economic growth. If you’re focused on securing your estate and passing on wealth to loved ones, these updates are worth your attention. Here’s a look at the key areas and how they may affect your financial planning.

Inheritance Tax (IHT)

IHT is charged on the net value of a person’s estate after they have died. Not all estates are taxable; only those valued at more than £325,000 stand to be taxed (at 40% on the value above £325,000). This is the basic IHT threshold. The Chancellor confirmed this threshold will remain unchanged until 2030, which should mean many families remain unaffected by IHT.

However, changes from April 2027 may affect more estates:

• Pension funds and death benefits will now be included in your estate’s value, potentially taking more estates over the IHT threshold. If this affects you, we can help you explore ways to manage your family’s inheritance tax burden effectively.
• IHT reliefs for agricultural and business assets: Tax relief will reduce to 50% on agricultural and business assets valued over £1m. For many farming families, this could mean a notable impact on inheritance planning.

Capital Gains Tax (CGT)

CGT rates will increase from 10% to 18% for basic rate taxpayers, with higher-rate taxpayers paying between 20% and 24%. If you are considering selling assets, such as shares or a second property, it may be wise to accelerate your sale before these changes take effect.

Pension changes

The state pension will rise by 4.1%, in line with average earnings. But another key change affects those who have planned to pass on pension wealth:

• Inherited pension pots will now count towards the IHT threshold. This adjustment aims to prevent pensions from being used mainly as a wealth transfer tool, maintaining their original purpose of retirement funding.

Second homes

Stamp duty on second homes will rise to 5% from 31 October 2024. While this may benefit first-time buyers, there is no additional relief for them, making it uncertain how effective this change will be in boosting first-time homeownership.

Planning for the future

That’s a snapshot of some aspects of the Budget that are sure to affect our clients and the plans they have already, or are soon to, put in place. Every situation is different, of course. But what’s common to everyone is the need to take stock of the financial and other changes that affect them.

Understanding how to make the most of what you’ve got, and how to pass on the value to those you love, makes for peace of mind now and a secure financial future for your family.

If you’re unsure how the Autumn Budget impacts your financial planning or would like tailored advice on IHT, CGT or any other aspect of wealth preservation, call us now on 0808 256 2917 for a confidential consultation today.