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Home / News / How does Labour’s Budget affect you – Changes to Inheritance tax, Capital gains and other Reliefs

How does Labour’s Budget affect you – Changes to Inheritance tax, Capital gains and other Reliefs

31 October 2024

On 30 October 2024, Rachel Reeves, Britain’s first female chancellor, delivered Labour’s first Budget in 14 years.

Here is a quick summary of how her budget will affect your personal finance and tax:

Inheritance Tax

The inheritance tax (IHT) nil rate band will remain at £325,000 and the residence nil rate band will remain at £175,000 until 2030.

Pensions

Currently, there is no IHT on unused pension funds held in discretionary trusts. From April 2027, inherited pension pots will be subject to inheritance tax, regardless of whether they are held in a discretionary trust.

Agricultural Business Relief and Business Property Relief

Currently, relief of up to 100% is available on agricultural assets and qualifying business. From April 2026, exemptions when inheriting farmland and businesses will be less generous. The 100% rate of relief will continue for the first £1 million of combined agricultural and business assets. If the combined assets are worth more than £1 million, the relief will be 50%.

For shares that are not recognised on the stock exchanges, the rate of business property relief is reduced from 100% to 50% in all circumstances. The rate of business property relief for AIM shares is also reduced to 50%.

Capital Gains Tax

Capital Gains Tax (CGT) is a tax on the gain made when you sell an asset that has increased in value.

For disposals made on or after 30 October 2024, the rates of CGT increase (except for residential property and carried interest).

For individuals, the lower rate of CGT will raise from 10% to 18%, and the higher rate of CGT will raise from 20% to 24%.

For trustees and personal representatives, the rate of CGT will raise from 20% to 24%.

From April 2025, the rate of CGT on carried interest will increase from 28% to 32% and from April 2026, and the Government will review this with a view to making it fairer and simpler.

For disposals of residential second homes, no changes were made by the Budget and the lower and higher rates of CGT remain at 18% and 24% respectively.

ISAs

The maximum amount allowed in an individual savings account (ISA) will remain at £20,000 until 2030.

For advice on lifetime estate planning, please contact our Private Client team. We are here to help you every step of the way.

To arrange an appointment:

This article was written by Redkite Solicitors,  Lowri Williams. To find out more about Lowri Williams and the support that she can provide to you, visit her website profile here: https://www.redkitesolicitors.co.uk/team/lowri-williams/

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.