Navigating the Autumn Budget 2024: Inheritance Tax Implications for Family Businesses and Farms

As an accountancy firm dedicated to guiding our clients through financial complexities, we understand the significance of the recent Autumn Budget 2024, particularly concerning inheritance tax (IHT) allowances. The decision to maintain the Nil Rate Band (NRB) at £325,000 and the Residence Nil Rate Band (RNRB) at £175,000 until April 2030 carries profound implications for many families as rising property values could lead to increased inheritance tax liabilities.

Understanding the Freeze on NRB and RNRB

The Chancellor’s announcement to freeze the NRB and RNRB means that, despite soaring property and asset values, these thresholds will remain unchanged until 2030. This freeze is likely to ensnare more estates under the IHT net, resulting in a heavier tax burden for families who may have previously been exempt. With a 40% tax rate applicable to any estate value above these thresholds, it’s crucial for families to recognise the potential implications.

The Importance of Gifting Strategies

In a welcome continuity, the Budget did not alter the existing gifting rules, which allow individuals to make tax-free gifts as long as they survive for seven years post-gift. This provision remains a valuable strategy for those looking to minimise potential IHT liabilities.

The retention of the 7-year rule offers flexibility for families aiming to manage IHT through lifetime gifts. However, it’s essential to start planning early and regularly review estate strategies to maximise these allowances. Early planning can make a significant difference in how families structure their estates to minimise tax burdens.

Key Reforms to Business and Agricultural Property Relief

A notable change set to take effect in April 2026 involves Business Property Relief (BPR) and Agricultural Property Relief (APR). Under the new rules, the 100% relief will only apply to the first £1 million of combined BPR and APR assets, while a 50% relief rate will be applicable for any value exceeding this threshold. This is particularly relevant for family owned farms where owners would be encouraged to review their wills in order to maximise the allowances.  

Looking Ahead: The Need for Strategic Planning

We encourage families to consult with their advisors to reassess estate plans in light of these changes. Effective planning remains the best approach to protect assets and minimise tax exposure for future generations.

As the landscape of inheritance tax evolves, our firm is here to assist you in navigating these changes. For tailored strategies that align with your estate planning objectives, please reach out to our team. Together, we can work towards ensuring that your assets are preserved for future generations while minimising unnecessary tax liabilities.

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