Autumn Budget 2024 update
Following The Chancellor’s first Budget on 30 October 2024 it was announced that the Government are planning to reform Agricultural Property Relief (APR) and Business Property Relief (BPR).
In summary APR and BPR are an Inheritance Tax (IHT) reliefs which can reduce the amount of tax charged on the estates of farmers and landowners by relieving the value of land and business assets, such as stock and machinery, from IHT.
Currently there is a 100% relief from IHT on most assets that qualify APR and BPR.
What are the proposed changes?
The proposed changes announced on the 30th October 2024 are that APR and BPR relief at the full rate of 100% will be restricted to a combined allowance of £1million per person. A rate of 50% will then apply to all assets over this allowance giving an effective rate of tax of 20% on all assets over the £1million.
Unlike other reliefs any part of the £1million allowance that is unused within a deceased’s estate will not be able to be transferred between spouses.
These proposed changes are subject to a Technical Consultation that is due to take place in early 2025, until this has taken place we won’t know the full details or have sight of any draft legislation.
These changes will also apply to any existing or future trusts which hold APR or BPR assets.
What other reliefs are available?
In addition to the £1million allowance for APR and BPR estates will also be eligible to claim the nil rate band of £325 and possibly the residence nil rate band of £175k. Both of these allowances are transferable between spouses, so if your spouse’s estate doesn’t make use of the full allowance your estate can.
It is worth noting that the RNRB is only available to estates where there is a qualifying interest in a residential property that you have lived in as your permanent residence, and it is left to direct descendants (not subject to any kind of trust). This allowance is also tapered on estate worth over £2million so where a combined estate of a married couple is over £2.7million the whole relief of up to £350k is lost.
Our advice
The budget came as a big surprise to many people in the industry and understandably has caused a lot of worry for a lot of people. If you are affected by these changes we would encourage you to speak to your advisors to discuss the changes in detail with qualified professionals and not to panic. There are options available, but it is important that decisions are made after full advice and in consideration of all relevant circumstances.
It has always been important that everyone has up to date Wills which are regularly reviewed and updated as circumstances change.
If you would like to review your Wills and other documents in light of the recent announcement, please arrange to speak to our Private Client Team.
(This article is not intended to be comprehensive or to provide specific legal advice. It should not be relied upon in the absence of specific advice given in relation to particular circumstances.)
For further information, please contact: Helen Green
