The upcoming Autumn Budget 2025 has sparked considerable discussion about the future of Inheritance Tax (IHT) in England and Wales. With thresholds frozen and receipts reaching record highs, many families are asking – should you act now to protect your estate?
Why the Budget timing might matter
The government has pushed the Budget back to 26 November, creating a tighter window for any pre-emptive action. Due to the delay, you may need to move more quickly if the rules change.
If new IHT measures take effect from Budget Day, gifts made after that date could face additional tax burdens.
Historically, governments rarely apply IHT changes retrospectively. For example:
- In 2006, changes to trusts applied only to new ones created after Budget Day.
- In 2024, new limits on business and agricultural property reliefs applied only from a specific date.
This suggests that gifts and estates handled before any announced cut-off may still benefit from current rules. But since nothing is yet confirmed, acting without advice could be risky.
What might be changing?
While official announcements are still pending, speculation centres around:
- A lifetime cap on tax-free gifts, possibly in the range of £50,000 to £200,000.
- A revision or removal of the “seven-year rule” (which currently reduces IHT for gifts made more than seven years before death).
- Simplification or removal of taper relief (the sliding scale that reduces tax on gifts given between years three to seven before death).
- Further changes to reliefs like business and agricultural property relief, and possibly freezing other allowances for longer.
It is worth noting that IHT receipts are already at record levels – £8.2 billion collected in 2024-25 – so more pressure to raise revenue may push through tougher rules.
Should you act now?
Yes, but carefully. Your strategy should focus on planning, not panicking.
The most sensible approach is to review your estate plan now, understand what you want to achieve, and be ready to act. Then take advice before you make any large transfers so that your plans fit whatever is announced in the Autumn Budget.
What you can do today
Here are practical steps you can take now to prepare:
- Review existing gifts: Check whether you have used your annual gifting allowance (£3,000 per year), small gifts exemption (£250 per recipient) or regular gifts out of surplus income.
- Examine larger transfers: If you plan to transfer property, shares or large amounts, evaluate the timing and tax implications, especially if rules change post-Budget.
- Update your wills and trusts: Make sure these reflect your current wishes and are structured flexibly enough to adapt to changed tax rules.
- Keep records: Ensure you have documentation for any gifts (dates, amounts, recipients) so that any reliefs can be claimed correctly.
- Don’t forget other taxes: If you gift assets, you may face CGT, or affect reliefs available at death. Seek professional tax and legal advice.
- Consider trusts: Depending on your situation, a trust may provide greater control and protection in uncertain tax climates.
The bottom line
The Autumn Budget could mark one of the most significant moments for IHT reform in years. With frozen thresholds, rising receipts and a government under pressure to raise revenue, change seems highly likely. Acting now to secure current rules makes sense – but only with proper planning, professional advice and a view to your long-term needs. At Dudden Law we can help you review your situation, explain the implications of any changes, and prepare a strategy that fits you and your family.
If you would like to explore how the upcoming Budget might affect your estate, please contact us at Dudden Law and we will guide you through the options.
Insights from Carrieanne Greenway
Client Manager
