The Chancellor’s October 2026 Budget may not have contained the dramatic tax changes many had anticipated, but for individuals and families engaged in estate and succession planning, there are still important issues to consider.

While there were no major increases to Inheritance Tax (IHT) rates or significant new restrictions on estate planning opportunities, existing tax pressures remain, and the forthcoming changes to the taxation of pensions make estate planning even more important.

Pension Wealth Should Be Reviewed Now

For many families, pensions have traditionally provided an efficient way of passing wealth to future generations. However, from April 2027, most unused pension funds and pension death benefits are expected to form part of an individual’s estate for IHT purposes, meaning those with substantial pension funds may find that their estates are exposed to greater levels of IHT than previously expected.

In light of these forthcoming changes, individuals should consider reviewing their pension nominations, Wills and estate planning arrangements to ensure they remain appropriate and effective under the new regime.

More Estates Are Being Caught by Inheritance Tax

Whilst no changes were made to IHT rates, the ongoing freeze in available allowances continues to bring more estates within the scope of Inheritance Tax.

The nil-rate band remains fixed at £325,000, while the residence nil-rate band also remains unchanged from £175,000 – both currently frozen until at least April 2031. At the same time, rising property prices and investment growth continue to increase the value of many estates.

This means that even those who would not traditionally regard themselves as wealthy may now find that IHT is becoming a consideration.

Capital Gains Tax Remains Relatively Stable

One area of reassurance is that the Budget did not introduce the significant Capital Gains Tax reforms that many commentators had anticipated.

This provides a greater degree of certainty for families considering lifetime gifts, business succession plans, or wider wealth transfer arrangements.

The allowance for individuals has been reduced from £12,300 to £3,000 in the last 2 years and so careful planning remains critical.

Tax rules continue to evolve and it remains important to ensure that existing plans remain appropriate.

A Good Time to Review Your Affairs

Effective estate planning is often most successful when undertaken well in advance.

Every family’s circumstances are different and advice should always be tailored to individual objectives and family dynamics.

Depending on individual circumstances, opportunities may include:

• Making lifetime gifts;
• Reviewing trust arrangements;
• Updating Wills;
• Considering business succession planning; and
• Ensuring assets pass in the most tax-efficient manner possible.

The months leading up to the April 2027 pension changes provide an opportunity for individuals to review their affairs and ensure that their estate planning reflects both their wishes and the current tax landscape.

How We Can Help

Estate and succession planning is about far more than reducing tax. It is about ensuring that your assets pass to the right people, at the right time, and in accordance with your wishes.

If you would like to discuss the potential impact of the recent Budget on your personal circumstances, please contact our Wills, Trusts and Probate Team at Phillips Law via the booking form below. We would be pleased to review your existing arrangements and help you plan for the future with confidence.

This article was written by Sophie Marshall, Associate in Phillips Law’s Farnborough Wills, Trusts and Probate department.