Will the UK Budget in November Affect Inheritance Tax?
Will the UK Budget in November Affect Inheritance Tax?
With the next UK Budget scheduled for 26 November 2025, many people are asking: “Will my inheritance tax position change?” The short answer: probably yes, but no firm changes have been confirmed yet.
Here’s a breakdown of what we know, what could happen, and what you should be doing now.
🔍 What’s the current IHT situation?
The nil-rate band (the amount of an estate that can be passed on before IHT is chargeable) remains at £325,000 for individuals (or £650,000 for a married couple) and was frozen long ago.
The residence nil-rate band (for a main home passed to children or grandchildren) stands at £175,000.
The tax has been brought into scope for new categories already. For example, recent announcements indicate that from April 2027, pensions will enter the IHT estate calculation.
The fact that thresholds are frozen while asset values (especially property) rise means more estates are becoming liable.
💡 What changes are being speculated for the November Budget?
Although nothing is guaranteed until the Chancellor speaks, there is strong speculation about several possible reforms:
A lifetime cap on tax-free gifts: Currently you can give assets in your lifetime and they fall outside your estate for IHT if you survive 7 years. That may be restricted or limited.
A change to the 7-year rule: The taper relief schedule (which reduces IHT on gifts made 3–7 years before death) might be revised, extended (for example to 10 years), or replaced.
Further freezing or reducing allowances: The nil-rate and residence bands might remain frozen (or even be effectively reduced in value) to increase tax receipts.
Additional relief changes: Business Property Relief and Agricultural Property Relief are already subject to reform; further tweaks might be announced.
📆 Why the timing matters
Because the Budget is due soon, if changes are announced that affect IHT, timing of actions matters:
If you make gifts before the effective date of change, you may still benefit from the current rules.
If you wait until after a change is announced (or takes effect), you may face restrictions or new rules.
It’s important to distinguish between announcement date and effective date. Often changes are announced in the Budget but apply from a future date.
🧭 What should you do now?
Given the possibilities, it’s wise to review your estate and tax planning now, rather than wait. Key steps include:
Review your current estate plan – Are your wills, trusts, gifts aligned with your goals and current rules?
Consider lifetime gifts – If you were planning to gift assets to reduce your estate, you may want to act sooner rather than later.
Evaluate your pension estate exposure – With pensions slated to fall into IHT in 2027, now’s a good time to review pension death-benefit arrangements.
Don’t panic – Act thoughtfully, not rashly. Major changes to IHT often come with transitional rules.
Seek professional advice – Because the rules are complex and subject to change, a qualified estate planning adviser or solicitor is important.
✅ Bottom line
While the November Budget could bring material changes to inheritance tax, nothing is certain yet. The government is under pressure to raise revenue, and IHT is one of the tax-areas under scrutiny. But until the Chancellor confirms the details, any planning must be carried out with care.
In the meantime: review your position, consider acting earlier if appropriate, but always with professional guidance.
