Post-Budget 2025 Reflections: What the Changes Mean for Estate Planning

The recent Budget introduced a range of measures that will affect how individuals and families structure their estates, pensions and property holdings. While some changes take effect immediately and others are planned for future years, the overall direction is clear. Estate planning now requires closer attention and more frequent review. 

Inheritance Tax Thresholds Frozen

The Budget confirmed that the main Inheritance Tax allowances will remain frozen. With property values continuing to rise, more estates are expected to fall within scope. Families whose assets are approaching the £1 million combined allowance should consider whether lifetime gifts, trust structures or more detailed planning could help manage future exposure. 

Pensions May Become Taxable on Death from 2027

Pensions have long been a tax-efficient way to pass wealth to the next generation. The proposal to apply income tax to pension pots on death from 2027 represents a significant shift. Anyone relying on pension benefits as part of their estate planning should review their Will and death benefit nominations to ensure these remain suitable. 

Capping of Business and Agricultural Property Relief

From 2026, relief for business and agricultural property will be capped. This may lead to higher tax charges for some estates, particularly where the underlying business or farmland has appreciated in value. Families connected to trading businesses or agricultural enterprises should obtain updated valuations and explore planning options well ahead of the change. 

Potential Reform of Lifetime Gift Rules

While no immediate reform has been announced, the Government indicated that the rules on lifetime gifts may be modernised. As this is a core planning tool for IHT mitigation, early action remains important for those considering passing assets to family during their lifetime. 

UK Tax Rules to Capture Certain Non-UK Resident Trusts

Trusts connected to non-UK residents may now fall within the scope of UK taxation. Individuals with international assets or cross-border family arrangements should review any existing structures to ensure they remain compliant and effective. 

Property Measures: Impact on High-Value Homes and Landlords

Alongside broader estate planning considerations, several Budget measures will affect homeowners, property investors and landlords. 

The £2 Million Property Surcharge (from April 2028)

A new 1 per cent Stamp Duty Land Tax surcharge on residential properties valued over £2 million will take effect from April 2028. Although implementation is a few years away, this measure is already influencing long-term planning for families and investors operating in the higher-value end of the market. It may affect future acquisition strategies, the timing of disposals and decisions around personal versus company ownership. 

Abolition of Multiple Dwellings Relief

Multiple Dwellings Relief (MDR) has been abolished, increasing SDLT costs where more than one property is purchased in a single transaction. This will particularly affect landlords acquiring blocks of flats or expanding portfolios efficiently. 

Removal of the Furnished Holiday Lettings Regime

The end of the Furnished Holiday Lettings (FHL) regime removes several tax advantages previously available to holiday cottage and short-let owners. Estates containing such assets may see increased tax exposure and may need to re-evaluate the long-term viability of these holdings. 

Reduction in the Higher Rate of Capital Gains Tax on Residential Property

The reduction in the higher CGT rate on residential property disposals may present opportunities for landlords considering sales. It also raises questions around whether certain properties are best retained until death or transferred during lifetime as part of wider succession planning. 

Increased Anti-Avoidance Measures

The Government has signalled a continued focus on anti-avoidance, particularly in relation to offshore or complex property structures. Landlords with more intricate arrangements should ensure these remain appropriate and compliant. 

For families with substantial property interests, these developments reinforce the need to revisit ownership structures, expected future tax liabilities and how property fits within wider wealth planning. 

Wider Considerations

Several broader issues should also be factored into estate planning: 

Probate delays remain common, making clear and well-prepared documentation essential. 

Digital assets, online accounts and cryptocurrency holdings continue to present practical challenges if not recorded properly. 

The interaction between IHT, CGT and SDLT has become increasingly complex, particularly for clients with mixed property, business and investment assets. 

What Should You Do Next?

For most individuals, this Budget provides a timely opportunity to review their Will, pension nominations, trust arrangements and property ownership structures. Those with business interests, agricultural assets or larger property portfolios may benefit from more detailed advice. 

If you would like tailored guidance on any of the issues raised, our private client team can help you put the right structures in place. 

For confidential advice, contact us at enquiries@rlksolicitors.com or 0121 450 7800.