The UK tax landscape has changed significantly since Labour came to power in 2024, with further reforms expected over the coming months.

Since the Labour government came to power, we have seen a number of changes affecting individuals, business owners and those planning how to pass wealth to future generations. Changes have now happened with the leadership of the Labour party and with a new Prime Minister now in office, there is naturally a great deal of speculation about what further changes may lie ahead.

Whilst nobody can predict exactly what tomorrow’s budget will contain, there are already several important reforms that have changed the way many people should approach estate planning.

Inheritance Tax

In the October 2024 Budget, Rachel Reeves announced major changes to the Inheritance Tax landscape.

Agricultural and Business Property Relief

One of the most significant changes for many business owners and farming families came out of the October 2024 Budget, when the Government announced wide-ranging reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR).

From April 2026, the previously unlimited 100% relief available on qualifying agricultural and business assets has been capped.

Following further Government announcements in late 2025, the maximum amount qualifying for 100% relief was increased from the originally proposed £1 million to £2.5 million. It was also confirmed that this allowance would be transferable between spouses and civil partners, potentially allowing married couples to benefit from a combined £5 million allowance.

For many business owners, these changes have prompted a review of succession planning and estate planning arrangements. Depending on your circumstances, there may be opportunities to restructure assets and ensure your affairs remain as tax-efficient as possible.

Pensions

Another change announced in the October 2024 Budget related to pensions.

From April 2027, most unused pension pots are expected to form part of a person’s estate for Inheritance Tax purposes. Historically, pensions have often been viewed as an effective way of passing wealth to future generations outside of the Inheritance Tax regime. These changes could therefore have a considerable impact on many families and have created a significant cause for concern for many people who have built up wealth in large pension pots.

Although implementation remains some time away, these reforms are expected to proceed unless further announcements alter the position. Reviewing your Will, pension nominations and wider estate planning now can help ensure your arrangements remain appropriate as the changes take effect.

Looking ahead

The UK tax system continues to evolve and clients are understandably asking which areas may be reviewed next.

Whilst it would be inappropriate to speculate on specific Government announcements, at Phillips Law we are continuing to monitor developments across a number of areas, including:

• further changes affecting business owners;
• Capital Gains Tax;
• reforms to the social care regime and how this will be funded;
• additional tax measures that may be introduced to increase Government revenue; and
• the continued implementation of announced Inheritance Tax reforms.

For individuals and families, the key message is not to wait until further changes are announced before reviewing their affairs. Estate planning should be reviewed regularly to ensure it continues to reflect both your personal wishes and the current legal and tax landscape.

A joined-up approach

Estate planning is no longer simply about having a Will. It involves considering your assets as a whole, including your business interests, pensions, property and investments.

At Phillips Law, we work closely with financial planners, accountants and wealth managers to provide a holistic approach to estate planning, helping clients understand how legal and tax changes may affect them and ensuring their plans remain fit for the future.

If it has been several years since you reviewed your Will or estate plan, or if your circumstances have changed, now is a sensible time to seek professional advice.

Find out more and contact us via our form on: Wills Trusts & Probate Solicitors Basingstoke

Written by Sian Lias, Partner and Head of Wills, Trusts and Probate in Basingstoke.