Inheritance Tax Planning Strategy After The Budget

What Do You Need To Do About Inheritance Tax Following The Budget?

In the run-up to the UK Autumn budget, delivered in November 2025, inheritance tax (IHT) was a key focus. There was widespread speculation that the IHT landscape would be significantly altered, particularly in respect to some long-standing reliefs. The 2024 Autumn budget had proposed limiting the availability of 100% IHT relief on agricultural and business property. This would have been a huge change from the unlimited relief for qualifying assets that existed at the time.

The proposals met with a lot of resistance and in the 2025 budget the government backtracked on some elements. Agricultural relief and business relief were not restricted to the extent initially proposed. Following the budget, the cap for qualifying agricultural and business assets was set at £2.5 million rather than the originally proposed £1 million. This means that how inheritance tax is structured, and the options you have for planning around it, have been left largely unchanged for most people.

This is reassuring and means there is no need to rush into any hasty decisions: the same sensible planning principles still apply.

Changes to some IHT reliefs, not the whole system

While the government did not carry out the fundamental reforms that had been signalled in 2024, they did change some allowances and thresholds. This will undoubtedly impact some people, but it doesn’t mean the current approach to IHT planning should change. Instead, the budget should serve more as a useful prompt to review your arrangements. It is important to regularly check they still reflect your circumstances and priorities.

Inheritance tax planning is about choices, not just tax

When people think about IHT, they tend to have their own personal view of what it means and what, if anything, they should do about it. Some people are relaxed about the idea their children might have to pay inheritance tax. They feel it’s not their problem to sort out. Others feel very strongly that they do not want any of their hard-earned wealth ‘given’ to the government. Most people probably fall somewhere in between.

There are no hard and fast rules. What matters is recognising your own perspective and what that means – and then ensuring your plans are aligned with it. Worrying about it but doing nothing could easily have the opposite impact to the outcome you would hope for. Not finding the right advice for your circumstances can also have adverse consequences. Being properly informed will enable you to make the right decisions for you and your family.

IHT planning: what you need to know

The subject of IHT often leads to a lot of frustration. The concept of paying more tax when wealth has often already been taxed when it was earned, invested, or used to purchase property can upset people.

Effective IHT planning is not about addressing the perceived rights and wrongs of inheritance tax. It’s also not about trying to game the system. Knowing the rules helps you understand how they apply to you and what is likely to happen to your wealth when you die. Once you know that, you can decide how much influence you want over what happens to your estate.

Choosing not to plan is still a decision. But it leaves things to chance, not choice, and can have implications for your family you may not be aware of.

IHT and probate timelines

IHT must be paid before probate, the legal process that allows executors to access and distribute the assets of an estate, is granted. This means beneficiaries may need to find funds to pay tax before they can access the assets themselves. This can lead to serious cash-flow problems and even having to sell assets in a hurry. It can mean delays in receiving money from an estate and penalties for not paying IHT in time.

Planning ahead can help ensure that funds are available when they are needed.

The five approaches to inheritance tax planning

 Inheritance tax mitigation tends to fall into one or more of these five broad approaches:

• Spending it

You can use your wealth during your lifetime rather than passing it down to the next generation. This could be on experiences, your lifestyle, or supporting your family while you are still alive.

• Gifting it

You can pass assets (with certain restrictions) to others during your lifetime.

• Trusting it

You can use tax-efficient vehicles like trusts to control how and when your wealth is passed on.

• Investing it

You can invest your money and structure these investments in a more tax-efficient way.

• Insuring it

You can use specialist insurance policies to help you cover a potential inheritance tax liability.

Most people will use a combination of these approaches rather than relying on a single solution. The right approach for you will depend on several things. You should think about:

• what matters most to you,
• how much control you want to retain, and,
• how comfortable you will be making these changes during your lifetime.

These were the options available before the budget, and they remain just as relevant and valuable after it.

Why family conversations are so important

One of the most effective and often overlooked aspects of inheritance tax planning is communication. Having an open dialogue with members of your family about your intentions, expectations, and priorities can make planning easier and more effective.

If you don’t have open communication, it can lead to assumptions being made. If these assumptions do not match reality, confusion and tension often follow, creating issues later on. Good planning can give you and your loved ones far more peace of mind and clarity, not just tax efficiency.

What do you need to do now with your IHT planning?

If you already have plans in place, it’s worth checking the strategies and arrangements you currently have are still valid. Circumstances change all the time. If you haven’t started on an IHT-planning journey yet, you will want to work out:

• The current value and structure of your estate
• What you want your wealth to achieve, both now and in the future
• Who you want to benefit and how
• How existing allowances and options apply to your situation

A professional can help you with this. Tax planning does not have to involve complex strategies and plans can be reviewed regularly.

Taking a calm approach to tax planning in a changing environment

Although the budget did not introduce the sweeping inheritance tax reforms some people feared, it still gives us a useful opportunity to pause and reflect. IHT planning works best when it is considered, measured, and aligned with your wider financial goals.

Would you like to review your current position and understand the options available to you for inheritance tax planning? And if you already have arrangements in place, maybe it’s time to revisit them to make sure they still work for you. Sometimes a simple conversation can help bring clarity and reassurance.

At Paula Bicknell Wealth, we are always available to help you understand how you can make better decisions around your finances. Why not get in touch?

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is generally dependent on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.