It’s really important to caveat ahead of the formal Budget announcement that there is plenty of speculation and nothing is set in stone. NatWest Premier does not provide tax advice and the below should not be taken as such. We recommend you contact an independent tax advisor to discuss your personal tax situation.

The October 2024 Budget announced several measures that aren’t due to come into place until 2026 or even 2027. We now have draft legislation for much of this, although it’s still being worked through Parliament.

Inheritance tax (IHT), agricultural property relief (APR) and business property relief (BPR) reforms, which dominated the headlines last year, are due to apply from 2026. So, from 6 April next year, family agricultural property or business property will be subject to IHT at 50% of its value above £1 million.

With IHT currently applied at 40% above £325,000, careful consideration is also important to ensure you’re balancing your family’s needs alongside your tax requirements.

You may want to speak to an accountant to make the most of the reliefs that will be available.

In 2027, there is another big change due – IHT on an inherited defined contribution pension. Again, there has been a consultation about how these rules should work, and it now seems the executors of the estate will primarily be liable for reporting and paying to HMRC any IHT due.

This IHT change has meant a lot of people are having to think differently about the purpose and use of their pension pots. There is the also the potential for income tax on the pension withdrawal so you may want to consider your options here if a major pension drawdown is part of your future plans. With the help of your accountants and financial advisers you can discuss the timings, size of a potential lump sum withdrawal and what best to do with it.

However it is still important to remember that pensions remain an incredibly powerful tool for saving for retirement.

Gifting money or assets to family members is an established way of passing on your wealth before you die. Currently, a gift made to an individual is classed as a potentially exempt transfer (PET) and is not subject to IHT if it is made seven years or more before the donor dies.

There are rumours that this time frame could rise, or that a threshold could be brought in to restrict the amount gifted before tax applies. However, an important caveat is that we do not know whether these measures are even being properly considered by the government.

There are numerous other suggestions including potential changes to pension lump sums, a restriction on the tax relief currently applied to pension contributions, a restriction of ISA allowances and national insurance on rental income. Again, at this stage, this is all speculation.

Most importantly, the key message is to think sensibly about your finances and not be panicked by the possibility of tax changes. Planning for your finances will often go hand-in-hand with planning your family’s future – so often the best guidance is not to do anything rashly.

Today, families may be worried about taxes on finances or assets, but selling an asset quickly may mean you don’t receive the full value you had hoped to achieve when you bought it. And realising a sale could mean you fall within another tax threshold elsewhere.

What many people fear are changes that come into effect at midnight on Budget day. For all the most significant reforms, people will be well informed and know what is coming as there will be a long consultation process before these policies are implemented.

Tax policies are not designed to catch people off guard – although sometimes there are anti-forestalling rules to stop people taking advantage of gaps in the law that Parliament did not intend. Remember that very few things in the Budget are sudden in effect, there is debate in Parliament until the law is passed, which can take many months.

However, the possibility of change may help you think about how and when to move finances or assets between family members.

For example, if you’re considering gifting a sum to a child to help with a house deposit, you may want to do it sooner rather than later. But be aware it’s often best to plan around your goals rather than tax per se. You still need to ensure the person receiving the money is ready for it and understands its implications and the mutual goals you may have as a family.

At a recent investment update webinar, Sean Rabbitt, Director at NatWest, was joined by Fahad Kamal, Chief Investment Officer at Coutts – the bank behind NatWest Invest – to discuss what is driving financial markets in the lead up to the Autumn Budget.

Topics of discussion included what the Budget could mean for the UK economy, how investors feel about the recent all-time highs of stock markets, and whether artificial intelligence will be a long-term driver of performance. 

The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.

• Nothing is set in stone until 26 November, and even then, much will be subject to consultation and review
• Large tax changes typically take a while to be debated, processed and applied – they rarely happen overnight
• Acting too quickly could be problematic

Planning your family finances can often revolve around generational transition. For families, this means careful planning to ensure money moves to family members in a timely and structured way – making sure they are ready to manage it while also being aware of the tax implications that may apply at such a juncture.

Our Premier banking team is on hand to provide you with a personal, family-orientated service, working to understand and realise the ambitions unique to each family. That might involve passing on the family business or home ownership, creating trusts or managing a significant inheritance.

Find out more about how we could help you with your financial goals.

Criteria, terms & conditions and fees may apply for our services.

Tax reliefs referred to may change. The availability and value of any tax reliefs will depend on your individual circumstances.