Private clients and advisors are being urged to review personal wealth and estate planning strategies as speculation grows over potential tax reforms ahead of this month’s Budget.
Changes could affect inheritance tax (IHT), capital gains tax (CGT), pensions, wealth taxes, and non-domicile status, potentially reshaping financial planning for individuals and families across the UK.
Esther Woolford, partner and agriculture sector head at national law firm Clarke Willmott, recently commented that while rumours of IHT threshold increases were welcome, caution was needed.
Indeed, reports that suggested the threshold for IHT could rise from £1 million to £5 million (£10 million for couples), are already being denied by government, despite the pressure that it would ease on estates, including family-owned farms, with very hard-hitting stories for some families and their circumstances being widely reported. This includes fifth generation farmer, Charlie Rees in Pembrokeshire, who has been struggling with a cancer diagnosis alongside a desire to protect the farm. “It is very tragic that farmers are considering their own demise as a way to save the farms that they have built up during their lives”, says Esther Woolford.
“Clients should continue to consult advisers and plan for multiple scenarios to protect the next generation.”
She says succession planning should be more than a one-off event. Engaging younger family members early can strengthen responsibility and long-term thinking, but it must be ongoing to ensure businesses can absorb potential new tax burdens.
CGT reforms are under discussion, with the Budget on 26th November expected to include potential rate increases and changes to reliefs.
“There is speculation that rates could increase and reliefs may be adjusted,” said Michelle Seddon, partner in Clarke Willmott’s private client team.
“Clients with significant assets should review the timing of disposals and whether current reliefs, such as the annual exempt amount, can be utilised effectively.”
Pension planning is another key area under scrutiny.
“The tax-free lump sum from pensions could be capped, with figures around £40,000 being discussed. This could have serious implications for retirement planning, particularly for those relying on flexible pension access.”
Although no formal wealth tax has been confirmed, discussions have continued around levying taxes on net assets above £10 million or introducing annual charges on high-value properties.
“Any such measures could discourage investment in the UK, similarly, non-domicile rules may be tightened further, so clients with international connections should monitor developments carefully.”
Michelle urges proactive planning ahead of the Budget.
“Now is the time to review estate plans, consider pre-budget actions and take expert advice. Even indirect changes could have a significant impact on personal wealth, so staying informed is critical.
“Early action and professional guidance are the best ways to navigate potential reforms and protect long-term financial plans.”
Speak to our team
For more information or advice please contact Michelle Seddon or Esther Woolford.
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