For all the speculation swirling around ahead of today’s Autumn Budget, the Chancellor delivered only one IHT-related announcement, and it wasn’t the sweeping reform many had been anticipating.
Instead, the sole announcement was a targeted, but important correction: all payments under the Infected Blood Compensation Scheme will now be entirely exempt from Inheritance Tax, regardless of when and how they are passed down. This removes an uncomfortable outcome where victims’ families could previously face a 40% IHT charge on compensation designed as redress.
Beyond this, there were no broader changes to thresholds, gifting rules or general estate planning policy, despite the rumours.
While today’s Budget was quiet on the wider IHT reform, advisers should remember that significant changes are already in the pipeline. The Autumn Budget 2024 reforms (now confirmed in draft legislation) will apply from April 2026, capping 100% Business and Agricultural Property Relief at the first £1 million of qualifying assets and reducing relief above that to 50%. Furthermore, the £1 million allowance will not be transferable between spouses or civil partners, which may necessitate careful estate planning as we move forward.
In addition, many undrawn pension pots and certain death-benefit payments will fall within the taxable estate from April 2027.
For now, firms should brief advisers on today’s single exemption announcement while ensuring succession plans, suitability reports and estate-planning assumptions are updated to reflect the upcoming 2026 and 2027 reforms. As ever, the real planning challenge lies not in what was announced today, but in what is already on the way.
How Thistle Initiatives Can Help
At Thistle Initiatives, we help firms stay ahead of regulatory change by strengthening their compliance frameworks. Whatever area of financial services you are involved in, we offer tailored support that’s practical, proportionate, and effective.
If you’d like to discuss how we can support your firm in light of the Budget changes, get in touch at info@thistleinitiatives.co.uk, or call 020 7436 0630 to speak with our team.
Meet the Expert
Paul Caine, Associate Director
As an Associate Director at Thistle Initiatives and a dedicated member of the Chartered Insurance Institute (CII), Paul consistently demonstrates his commitment to upholding the highest standards of professionalism and expertise in the financial industry. His involvement in Section 166 projects underscores his dedication to enhancing the industry's integrity and regulatory compliance. Specialising in pensions and investments, Paul possesses a profound understanding of regulatory compliance across various sectors. His established track record is a testament to his ability to deliver tangible benefits to his clients.