What the 2025 Budget Means for Inheritance Tax in the UK

by | Dec 18, 2025 | Uncategorised

The 2025 Autumn Budget brought news that will significantly affect inheritance tax and estate planning for many UK families often quietly, without headlines.

 

IHT Allowances Frozen Until 2031

The most important change: the main IHT allowances remain frozen. The nil-rate band (£325,000) and the residence nil-rate band (£175,000) have been confirmed to stay at those levels until at least April 2031. 

What this means in practice is that with rising property prices and asset values, more estates will now exceed the tax-free threshold. Assets that may once have been comfortably below the allowance can now trigger a 40% IHT bill often catching families unprepared. 

Business & Farm Reliefs Tightened and Transformed

For those with business or agricultural assets, there are important implications: from April 2026 the previously unlimited relief on qualifying business or farm assets will change to a capped allowance. The new £1 million 100% relief allowance will be frozen until 2031 but importantly, under the new rules it becomes transferable between spouses or civil partners.

If you’re a business owner or farmer, these changes underscore the need for early, careful estate and succession planning.

 

Wider Tax Pressures on Wealth

The Budget also introduces or continues pressures elsewhere: increased tax on property and investment income, savings, dividends and other wealth-derived income.

Taken together with frozen IHT allowances, this signals that the government is levelling up the tax burden on wealth, assets and inheritances making good estate planning more vital than ever.

 

What You Should Do Next

  • Review your assets: property, savings, investments, business or farm interests.

  • Revisit wills, trusts and succession plans especially if your estate now exceeds allowance thresholds.

  • For business/farm owners: explore use of the new transferable relief allowance before April 2026.

  • Consider gifting, pension planning or trust strategies to protect your legacy.

Bottom line: If you’ve been putting off inheritance or estate planning the 2025 Budget makes now the right moment to act.

To find out more or to book a free consultation, visit https://calendly.com/sallytrish/15-minute-consultation

Sally Herdman – The Inheritance Guru

www.theinheritanceguru.com