Understanding the Potential Impact of the 2024 Budget on Wills, Trusts, and Probate

From a Private Client point of view, Rachel Reeves’ budget could have been worse!

There were fears that she may abolish the Property Nil Rate Band (currently worth up to £175,000 per person subject to certain provisos). In fact the Chancellor extended the freezing of the Nil Rate Band Allowance at £325,000 per person until 2030. This will mean that each single person who owns a property (worth more than £175,000) and who leaves their estate to their children or grandchildren should continue to receive an allowance for inheritance tax purposes of £500,000.

However, there is a change to Agricultural Property Relief and Business Property Relief for properties worth more than £1m. These will now attract inheritance tax on the value over and above £1m but at a lower rate of 20% rather than the general 40% rate.

The main alteration to inheritance tax is that with effect from 6 April 2027, the value of any inherited pensions are to be included in a deceased’s estate, whereas previously if a person died before the age of 75 with a lump sum remaining in their pension pot, this cash usually passed to whoever they nominated to receive it tax free.

Turning to Capital Gains Tax, the rates have been increased from 10% to 18% (at the lower rate) and from 20% to 24% (at the higher rate). However, the Chancellor has not taken away the exemption applicable to one’s home which was something that had been suggested she might.