The Chancellor delivered her Budget on 26 November. Our head of Private Client, Bibi Fortin Lees, summarises the announcements most relevant to Private Client.

 Inheritance Tax: business and agricultural property relief

 The changes to business property relief (BPR) and agricultural property relief (APR) set out in last year’s Budget will still be introduced from 6 April 2026, but with one welcome concession.

From 6 April 2026, assets which currently qualify for 100% relief from inheritance tax (IHT) will continue to qualify for relief at the rate of 100% for the first £1 million for each individual (or trust), with a reduced rate of relief of 50% after that 100% allowance.  However, it was announced yesterday that any unused allowance will be transferable to a surviving spouse or civil partner, including where the first death was before 6 April 2026.

Although this concession is welcome and has been campaigned for since last year by numerous professional bodies, it will not go far enough to alleviate the concerns of farming families up and down the country about how farms and farming business are going to be able to afford to pay the IHT due.

Inheritance tax: nil rate bands

The IHT nil rate band will be frozen at £325,000 and the residence nil-rate band at £175,000 until April 2031.  The £2 million threshold at which the residence nil-rate band starts to taper will also remain frozen until April 2031.

This will undoubtedly result in increasing numbers of estates exceeding the thresholds and becoming liable for IHT.

Inheritance tax: charges capped for former excluded property trusts

With retrospective effect from 6 April 2025, trusts created prior to 30 October 2024 by individuals who were non-UK domiciled at the time of creation will have the IHT 6% ten-year anniversary charge and 6% exit charge capped at a maximum of £5 million in respect of the value of property per trust every 10 years for the lifetime of the trust.

Inheritance tax: Payments from the Infected Blood Scheme will be exempt from IHT

Following campaigns by professional bodies, the Society of Trust and Estate Practitioners (STEP) and the Association of Lifetime Lawyers (ALL), the Government has agreed to change the law, effective from 26 November 2025, so that bereaved families will not be liable to IHT on compensation paid under the Infected Blood Compensation Scheme and/or Infected Blood Interim Compensation Payment Scheme.

This is a great result and a tribute to the hard work of STEP and ALL in raising awareness of this important issue.

Capital gains tax: 100% relief on business sales made to employee ownership trusts will now only be 50%

The relief from Capital Gains Tax (CGT) available on qualifying disposals to Employee Ownership Trusts will be reduced from 100% to 50% for disposals made on or after 26 November 2025.

The relief was costing significantly more than anticipated when it was introduced in 2014, and this change attempts to rein in this cost whilst retaining a significant incentive to companies to consider employee ownership by charging a lower effective rate of tax on such disposals as compared to other disposal routes.

Other observations

There had been much speculation prior to the Budget around potential changes to the IHT lifetime giving rules, such as the introduction of a cap on the cumulative value of IHT-free lifetime gifts that an individual could made during their lifetime.  It is welcome that the rules around lifetime giving will remain unchanged, for now.

It was, however, disappointing that there were not further concessions made in respect of the upcoming changes to BPR and APR, nor to the pension changes announced in last year’s Budget which will result in most undrawn pension funds being brought within the value of a person’s estate for IHT purposes from 6 April 2027 and thus facing an IHT charge as well as an income tax charge on withdrawal.