The Autumn Budget, set to be delivered by the Chancellor on 26th November 2025, is more than just a fiscal update—it is an urgent deadline for proactive Inheritance Tax Planning.
With the government facing significant pressure to raise revenue, IHT is widely viewed as a prime target for reform. Changes announced on Budget Day often take effect immediately, meaning the tax-free allowances and strategies you rely on today could be blocked tomorrow.
You have a narrow window of opportunity to lock in current rules for wealth transfer before they disappear.
The Three Critical Rules Under Immediate Threat
The most effective tools for reducing your estate’s liability are currently under intense scrutiny. Experts predict major tightening:
- The 7-Year Rule is at Risk:
Currently, outright gifts (Potentially Exempt Transfers, or PETs) become fully IHT-exempt if you survive for seven years. Speculation is high that this crucial period could be extended to 10 years or longer , drastically delaying your Inheritance Tax Planning goals.
- A Lifetime Gifting Cap:
A significant reform could introduce a strict cap (possibly around £100,000) on the total value of lifetime gifting you can make tax-free , severely limiting your ability to reduce your estate proactively.
- Confirmed Restriction on Business Reliefs:
A confirmed law change will cap 100% relief for Business Property Relief (BPR) and Agricultural Property Relief (APR) at an aggregate total of £1 million starting in April 2026. Urgent action is necessary to secure the full 100% relief on high-value assets now.
Urgent Actions to Take Before November 26th
Effective Inheritance Tax Planning requires immediate execution. Take these steps to solidify your position:
- Maximise Your Annual Exemption:
Utilize the current £3,000 Annual Exemption, plus any £3,000 carry-forward allowance from the previous year, to immediately remove up to £6,000 from your estate, tax-free.
- Review Your Legal Foundations:
Ensure your Will is up-to-date and reflects your current wishes. For property, consider converting Joint Tenancy to Tenants in Common to ensure your share goes to your chosen beneficiaries, not automatically to the survivor.
- Secure Your Pension Benefits:
From April 2027, most unused pension funds will be included in your estate for IHT purposes. You must update your Expression of Wish forms now to nominate your spouse or civil partner and secure the IHT exemption against this future liability.
The time to secure your legacy is now. Don’t risk a 40% tax surprise.
Download the Full Guide and Checklist Today:
Our comprehensive guide, Pre-Budget Wealth Security: A Countdown for Inheritance Tax Planning, provides the detailed, step-by-step checklist required to safeguard your family’s future before the November 26th deadline.
Inside the full report, you will find:
- A full breakdown of the Taper Relief schedule and how accelerating gifts protects you.
- Instructions on formalizing gifts out of surplus income (GOOSI).
- Detailed legal steps for restructuring your property ownership.
- The professional action plan for high-value BPR/APR transfers before the 2026 cap.
Your Guide to Inheritance Tax Mitigation
With the Budget on November 26th, now is the time to review your estate plan. Learn how to protect your assets and ensure they go to your loved ones.
What is Inheritance Tax (IHT)?
Inheritance Tax is a tax on the 'estate' (your property, money, and possessions) of someone who has passed away. If your estate's value is over the threshold, a 40% tax is charged on the amount above it. This visualization shows how much of your hard-earned money could be lost to tax if your estate is above the allowance.
What's In Your Estate?
The first step in estate planning is knowing what you own. Your estate includes everything from your home and savings to investments, pensions, and even personal possessions. This chart shows a hypothetical breakdown. You should make a list of your own assets to get a clear picture.
Key Mitigation Strategies
Several strategies can help you legally reduce your IHT bill. The most effective plan often uses a combination of these methods, tailored to your personal situation.
The 7-Year Rule (Gifts)
Gifts you make to individuals are known as 'Potentially Exempt Transfers' (PETs). If you live for 7 years after making the gift, it becomes completely tax-free. If you pass away within 7 years, 'taper relief' may apply, reducing the tax charge over time as shown in the chart.
Use Your Gifting Allowances
Each year, you have several tax-free gift allowances. Using these does not start the 7-year clock and can reduce your estate's value immediately. This chart shows the most common allowances available to you every tax year.
Other Powerful Tools
- ✔ Make a Will: The foundation of all estate planning. A will ensures your assets go to the people and causes you choose. Without one, the law decides for you.
- ✔ Use Trusts: A trust is a legal arrangement that lets you put assets aside for beneficiaries. They can be very effective for IHT planning but require professional advice.
- ✔ Check Your Pensions: Most defined contribution pensions are not part of your estate for IHT purposes. Naming a beneficiary is crucial.
- ✔ Life Insurance: A life insurance policy written 'in trust' can provide a tax-free lump sum to your beneficiaries, which they could use to pay any IHT bill.
Your 4-Step Action Plan
Feeling overwhelmed? Start with these simple steps.
Value Your Estate: Make a simple list of your assets (property, savings, etc.) and debts.
Make or Update Your Will: This is the most important step. Ensure it reflects your current wishes.
Review Gifting: Can you use your annual allowances? Have you made any large gifts in the last 7 years?
Get Professional Advice: An expert can create a plan tailored to you. Don't wait for the Budget.
Frequently Asked Questions
What is the current IHT threshold? ►
The standard threshold (Nil-Rate Band) is £325,000. You may also get a £175,000 Residence Nil-Rate Band (RNRB) if you pass your main home to children or grandchildren. This means you can potentially pass on £500,000 tax-free. For married couples and civil partners, this can combine to £1 million.
Can I give my house away and still live in it? ►
This is called a 'gift with reservation of benefit' and is not effective for IHT. If you give your house away but continue to live in it without paying market-rate rent, it will still be considered part of your estate for tax purposes. Be very careful with this.
Are pensions subject to Inheritance Tax? ►
In most cases, defined contribution pensions are not included in your estate for IHT. This makes them a very tax-efficient way to pass on wealth. It is vital that you nominate beneficiaries for your pension pots, as this is separate from your will.
Why act before the Budget? ►
Budgets can bring changes to tax rules, including IHT allowances and reliefs. By reviewing your plan now, you are acting based on the current, known rules. Waiting could mean you miss an opportunity or are affected by a negative change. Acting now gives you peace of mind.
