The Chancellor’s Autumn Budget wasn’t just about ISAs and dividend tax. Hidden in the details were some significant measures that will reshape how families plan for wealth transfer, retirement, and property ownership. For financial planners, these changes create both challenges and opportunities for clients who want to protect their assets and plan ahead.
1. Inheritance tax – frozen thresholds and relief tweaks
Inheritance Tax (IHT) remains one of the most politically sensitive taxes, and while headline rates stay at 40%, the nil-rate band (£325,000) and residence nil-rate band (£175,000) are frozen until April 2031. That’s six more years of fiscal drag – and with property prices still rising, more estates will fall into the IHT net.
The Budget also confirmed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) from April 2026:
- 100% relief capped at £1 million combined for APR and BPR.
- Above that, relief drops to 50%.
- Unused allowances can now be transferred between spouses or civil partners, even if the first death occurred before April 2026 – a welcome tweak for succession planning.
Planning tip:
- Families with farming or business assets should review their estate plans now. The cap means that large estates could face unexpected tax bills unless strategies like lifetime gifting, trusts, or restructuring are considered early.
- For homeowners, the frozen thresholds mean that even modest estates could face IHT. Using allowances effectively and considering gifts during your lifetime can make a big difference.
2. Pensions – salary sacrifice cap and surplus sharing
From April 2029, the tax break on salary-sacrificed pension contributions will be capped:
- The first £2,000 per year remains exempt from National Insurance.
- Anything above that attracts NI charges for both the employer and the employee.
This change targets higher earners who use salary sacrifice to boost pension contributions. While income tax relief remains intact, the NI advantage will shrink.
Planning tip:
- If you use salary sacrifice, consider maximising contributions before 2029 to benefit from current rules.
3. Property – the new ‘mansion tax’ and higher income rates
Property owners and landlords were not left untouched. From April 2028, homes worth over £2 million will face a High-Value Council Tax Surcharge (dubbed the “mansion tax”):
- £2,500 per year for properties valued £2m–£2.5m.
- Rising to £7,500 for homes worth £5m+.
Meanwhile, property income tax rates will rise by two percentage points from April 2027:
- Basic rate: 22%
- Higher rate: 42%
- Additional rate: 47%
Planning tip:
- Landlords should review ownership structures
- High-value homeowners may want to explore downsizing or liquidity planning to manage future annual charges.
4. Why these changes matter for financial planning
These measures highlight a clear trend: stealth taxation through freezes and targeted relief cuts. For clients, the implications are significant:
- Estate planning: Frozen IHT thresholds and APR/BPR caps mean more families will pay tax.
- Retirement strategy review: Salary sacrifice changes reduce NI savings, so contribution strategies may need adjusting.
- Property portfolio rethink: Higher taxes on rental income and new levies on luxury homes could affect long-term returns.
5. Practical steps to take now
- Update your will and estate plan: Factor in the APR/BPR cap and frozen thresholds.
- Consider lifetime gifting: The seven-year rule still applies, so early action can reduce IHT exposure.
- Review pension contributions: Maximise salary sacrifice benefits before 2029.
- Plan for property tax changes: If you own high-value property, explore options to manage future costs.
The bottom line
The Autumn Budget may not have raised headline income tax rates, but its impact on wealth transfer, pensions, and property is profound. For individuals and families, the message is clear: don’t wait for 2026 or 2028 to start planning. Proactive steps now can protect your wealth, optimise tax efficiency, and give you peace of mind for the future.
How can we help?
Zoe Till is a Partner and Chartered Financial Planner in our expert Independent financial advisers team. Zoe’s areas of expertise include investment advice, retirement planning, IHT and lifetime cash flow modelling.
If you would like any advice concerning the subjects discussed in this article, please get in touch with Zoe or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online form.
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