Further changes to Inheritance Tax announced in Autumn Budget
The Autumn Budget introduces transferable allowances for agricultural and business relief but extends IHT threshold freezes, increasing the need for careful estate planning
The Chancellor’s 2025 Autumn Budget introduced important updates to Inheritance Tax (IHT) reliefs that will affect families, farms and business owners across the UK. These changes aim to address fairness concerns in previous reforms, but also extend the freeze on IHT thresholds, increasing the long-term tax burden.
What’s changing?
The Autumn Budget brings two key updates to IHT rules that will reshape estate planning for families and business owners. First, the government has introduced a transferable £1 million allowance for agricultural and business property relief and second, the freeze on IHT nil-rate bands and related allowances has been extended by an additional year to April 2031.
Transferrable £1m allowance for agricultural and business relief
From 6 April 2026, any unused portion of the £1 million allowance for 100% agricultural and business relief can be transferred between spouses or civil partners, even if the first death occurred before that date. This was a clear gap from when the cap was announced in the last budget and could remove the need for some of the complex ownership restructuring that had been taking place.
In particular, the level of the relief could simplify planning for farms and family businesses.
Extended freeze on IHT thresholds
The Chancellor has announced an extension to the frozen nil-rate band and residence nil-rate band which will now carry through to April 2031. This extra year of frozen thresholds means more estates will become liable for IHT in the coming years as asset values rise.
The effect on farmers and business owners
The transferable allowance is a welcome fix to one of the most problematic aspects of the 2024 reforms, which previously required both spouses to own shares of a business to fully benefit from relief. Without this change, many families faced the risk of selling land or businesses to meet tax bills.
However, the extended freeze on thresholds, combined with the inclusion of unspent pension assets in IHT from April 2027, is expected to significantly increase IHT receipts. The Office for Budget Responsibility forecasts annual IHT revenue to reach £14.5 billion by 2030/31, up from £9 billion in 2025/26. This underscores the growing importance of proactive estate planning.
Planning ahead for inheritance tax changes
Families and business owners may want to review their wills and succession plans now to ensure they make full use of available reliefs. With thresholds frozen and new rules on pensions and business assets, professional advice is essential to help preserve family wealth and avoid unnecessary tax liabilities.
Our experts at Evelyn Partners can help understand the Budget’s impact on your financial plan, your investment portfolio or offer a total wealth management perspective on your overall personal financial situation.
Book an appointment to discuss what the changes mean for you, and how to navigate what’s next.
