Inheritance Tax in the Autumn Budget 2024: What It Means for Families and Estates 

The Autumn Budget 2024 confirmed that key inheritance tax (IHT) allowances, including the Nil Rate Band (NRB) and the Residence Nil Rate Band (RNRB), will remain unchanged for the foreseeable future. With property values continuing to rise, this freeze on allowances could mean many families will see higher inheritance tax liabilities. 

“The Chancellor’s decision to keep the NRB frozen at £325,000 and the RNRB at £175,000 until April 2030 means that more families will likely face inheritance tax bills,” says Michelle Leggett, Senior Private Client Consultant Solicitor. “As property and asset values increase, more estates will exceed the thresholds, placing a heavier tax burden on middle-income families who may not have anticipated this impact.” 

Key Points from the Budget: NRB and RNRB Freezes 

The Chancellor did not change the Nil Rate Band (NRB), which will stay fixed at £325,000 until April 2030. Similarly, the Residence Nil Rate Band (RNRB) remains frozen at £175,000. These thresholds mean that, as property and asset values increase, more estates will become liable for IHT, with 40% tax applied above these thresholds. 

“Many families had hoped for an increase in these thresholds, given how much house prices and other assets have appreciated over the years,” Michelle explains. “The freeze effectively broadens the tax net, capturing estates that would not have been taxed under an adjusted threshold.” 

No Changes to Gifting Rules 

The Budget also made no mention of changes to the 7-year gifting period or the introduction of a lifetime gift cap. Current rules allow individuals to make tax-free gifts if they survive for seven years after making the gift, offering a valuable way to reduce potential IHT liabilities with strategic planning. 

“The retention of the 7-year rule provides flexibility for families looking to manage IHT through lifetime gifts,” Michelle says. “However, it’s essential to begin planning early and review estate strategies regularly to make the most of these allowances.” 

Reform to Business and Agricultural Property Relief 

From April 2026, changes will be introduced to Business Property Relief (BPR) and Agricultural Property Relief (APR). Under the new rules, the 100% relief will apply only to the first £1 million of combined BPR and APR assets, with a 50% relief rate applying to assets above this threshold. 

“This reform will likely have a significant impact on family-owned businesses and farms, where values can easily exceed £1 million,” Michelle notes. “It’s a substantial shift, meaning that families will need to factor in the potential tax exposure on the excess value of their business or agricultural assets.” 

Looking Ahead 

With the Chancellor opting to freeze IHT allowances and implement selective reforms, many estates could see increased tax burdens in the coming years. Strategic estate planning is more crucial than ever, especially for families who may face IHT for the first time due to rising property values and the upcoming adjustments to BPR and APR. 

“Families should consult with their advisors to review estate plans in light of these changes,” Michelle advises. “Effective planning remains the best way to protect assets and reduce tax exposure for future generations.” 

For further insights on how these inheritance tax changes might impact you, reach out to our team to discuss strategies tailored to your estate planning goals. 

Other changes in the autumn budget

Chancellor Rachel Reeves’ autumn budget provided clarity for first time buyers, confirming the government will not scrap proposed stamp duty changes or introduce an extension to current rates of first time buyer stamp duty relief. These decisions will directly impact home buyers in 2025.

Stamp duty rates are changing for all buyers from 31st March 2025. Click the button below to find out more: