Autumn 2025 Budget: What It Means for Private Clients

Inevitably, in the run-up to each autumn budget, there’s an air of speculation and unease because of what may be announced, the likelihood of certain changes being announced, and how this helps or hinders our clients moving forward. 

The focus of our Private Client department when re-examining our advice to clients post-budget is what this means in terms of estate and tax planning, management and administration. 

Following the delivery of this autumn’s budget, we’ve put together a headline summary of those changes relating to our practice. 

Income Tax

Last autumn’s budget extended the freeze on income tax rates until 2028. This will now be extended by a further three years until the tax year 2030/31. 

Many consider that the personal allowance of £12,570 is out of date (perhaps more so now that we will see an increase in minimum wage from April 2026), but for the foreseeable future this won’t be increased. 

For higher and additional-rate taxpayers, it’s likely that more spouses and civil partners will consider gifting income-producing assets to their lower-rate tax-paying spouse or civil partner. 

This is largely because of the 2% increase to property, savings and dividend income from 6 April 2027, after which, for example, basic-rate taxpayers can expect to pay 10.75% on dividend income (currently 8.75%), and for property and savings income, additional-rate taxpayers will suffer a rate of 47% (currently 45%). Interestingly, there is no increase in the additional rate for dividend income (39.35%). 

For all other types of income, rates stay at 20% for basic-rate taxpayers, 40% for higher-rate and 45% for additional-rate taxpayers. 

Inheritance Tax (‘IHT’) 

Whilst a clarification rather than a change, it was confirmed in this autumn’s budget that any unused agricultural or business relief up to the threshold of £1 million can be transferred between spouses and civil partners once it is introduced on 6 April 2026. As this was not crystal clear from last year’s report, families and business owners can now factor this into their estate planning. 

It was announced in the 2024 Budget that unused pension funds and death benefits from pensions would become liable to inheritance tax from 6 April 2027. There had been some concern as to how personal representatives would be able to arrange for payment of inheritance tax from pensions. It has now been confirmed that they will be able to direct pension fund administrators to withhold 50% for up to 15 months and to pay inheritance tax due. They will also not have any responsibility for arranging payment of inheritance tax on a pension which comes to light after a clearance certificate has been issued. 

After much campaigning by the families and representatives of those affected by the infected blood scandal, it has now been announced that such payments will be exempt from inheritance tax if paid to the estate of an eligible person after their death. It will also be possible for a living recipient to gift all or part of the payment without this being treated as part of their estate for inheritance tax if they fail to survive for seven years. The Infected Blood Inquiry estimated that over 30,000 people were infected and, given that the compensation scheme was only announced in spring last year, practitioners and laypersons will increasingly be administering the estates of impacted families. 

The standard death rate for IHT remains at 40%, which applies to the taxable value of a deceased person’s estate exceeding their available IHT allowances and which does not qualify for any reliefs. 

The current IHT allowances (a Nil Rate Band of £325,000 and the additional Residential Nil Rate Band of £175,000) will now be frozen for a further year until April 2031. The cap on relief for business and agricultural property relief, which has been set at £1 million when it comes into effect from April 2026, is also to remain at that level until at least April 2031. 

Additional anti-avoidance measures are also being introduced. 

Some useful links for further explanation and guidance on these allowances:
Gov.uk – ‘Inheritance Tax’
Gov.uk – ‘Check if You Can Get an Additional Inheritance Tax Threshold’

Capital Gains Tax (‘CGT’)

No changes were announced this week to CGT rates or allowances. This isn’t a huge surprise, given that the 2024 budget saw a significant increase to rates and previous years’ budgets significantly reduced the CGT allowance from £12,300 between 2020 and 2023 to £3,000 from April 2024. 

As a reminder, the basic rate is 18% and the higher rate (for the disposal of all assets, not just residential property) is 24%. 

It’s important to note that, unlike the annual exemption for gifts (also £3,000 for each tax year), any unused CGT allowance cannot be rolled over to the following tax year. In this case, the commonly used phrase ‘use it or lose it’ is fitting. 

Did You Know? 

Intriguingly, in a government policy paper published in October last year, it was reported that despite medical advances, a higher proportion of taxable estates are still of deceased females, owing to the fact that male spouses generally die first. This is because, commonly, on the first spouse’s death, their estate passes in whole or in most part to the survivor. 

How Can We Assist? 

Our Private Client department (privateclient@rfblegal.co.uk) routinely supports clients with estate planning, tailored tax and trust advice, and estate administration. If, post-budget, you are uncertain or concerned about how changes to tax may affect you or your family, please do get in touch.