Preparing for the UK Autumn Budget
As is often the case in the lead-up to the Chancellor’s Budget announcements, there is great anticipation and speculation around what may be introduced. This year, key topics such as limitations on tax-free cash, annual allowances, estate planning and gifting are taking centre stage in conversations planners are having with their clients.
While uncertainty can be unsettling, our aim is to provide clarity and peace of mind until the details are confirmed.
Why planning ahead matters
It’s important not to rush into decisions based on speculation. While some tax changes can take effect immediately, others – particularly legislative reforms – may be phased in over time. For example, the upcoming change that will see pensions included in an individual’s estate for Inheritance Tax (IHT) purposes is not due until April 2027.
This gives you time to review your financial plans and make informed adjustments. A conversation with a qualified financial planner can help identify opportunities to limit the impact and maintain control.
Why a financial planner matters
While we can’t predict every outcome, we can prepare for a range of scenarios.
Tools such as cashflow modelling allow us to test how resilient your financial plan is against potential changes. For example, we can model the impact of pensions being taxed at 40% or compare outcomes from gifting now versus later.
Inheritance Tax and pension reform
One of the most significant upcoming changes is the inclusion of pension assets within the estate for IHT purposes from April 2027. You can read about this in more detail in our earlier article. This shift will affect both retirement and estate planning strategies.
Clients with substantial pension pots should consider how this change may influence their legacy plans. Reviewing beneficiary nominations, drawdown strategies and alternative vehicles for passing on wealth will be key.
For those with large pensions, I’d recommend reading this article here.
Tax-free cash and gifting strategies
Using tax-free cash to make lifetime gifts remains a valuable strategy for transferring wealth efficiently. In addition to the well-known £3,000 annual exemption, clients may benefit from:
- Gifting from surplus income, which is immediately exempt if regular and well documented.
- Small gifts of up to £250 per person annually.
- Wedding gifts exemptions.
- Charitable giving, which can reduce the IHT rate on the remainder of the estate from 40% to 36%.
These exemptions can be powerful tools when used strategically and in line with long-term goals.
Additional IHT planning tips
Beyond gifting, there are several other ways to manage IHT exposure:
- Ownership structures: Reviewing how assets are held, such as joint ownership or tenants in common, can help optimise use of nil-rate bands.
- Trusts: While complex, trusts can offer control and protection for generational wealth.
- Family Investment Companies: These may provide flexibility and tax efficiency for clients with larger estates.
- Business Relief Investments: Certain qualifying investments, such as shares in AIM-listed companies or private trading businesses, may be eligible for Business Relief, potentially reducing the value of these assets for IHT purposes. With upcoming changes to relief thresholds, it’s important to review these holdings carefully.
- Updating your Will: Ensuring your will reflects current wishes and tax considerations is essential.
Staying focused on long-term goals
In times of uncertainty, it’s easy to become distracted by headlines and speculation. A financial planner can help you refocus on the goals you set at the start of your journey, whether that’s preserving wealth, supporting family, or enjoying your retirement.
By maintaining a long-term view and waiting for clarity before making major decisions, you can navigate change with confidence and control.
Next steps
If you’re concerned about how the Autumn Budget or upcoming pension reforms may affect your financial plan, now is a good time to review your arrangements. Whether it’s updating your estate strategy, exploring gifting options, or modelling future scenarios – we’re here to help.
Let’s ensure your plan remains resilient, tax-efficient, and aligned with your long-term goals.
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only. This communication does not constitute financial advice. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner to take into account your particular investment objectives, financial situation and individual needs.
The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
Please note
Tax treatment depends upon individual circumstances and is based on current UK tax legislation, that is subject to change at any time.
Past performance is no guarantee of future performance.
The value of an investment and the income from it can fall as well as rise and investors may get back less than they invested. Your capital is therefore always at risk. It should be noted that stock market investing is intended for the longer term.
