With the Chancellor’s first Budget due on 28 October, here is what is already on the way, what is being talked about and what we would suggest doing in the meantime.
Every autumn, the weeks before the Budget bring a wave of headlines about what the Chancellor might do to inheritance tax, capital gains tax, pensions and property. This year is no different, and if anything the speculation has been louder, because John Healey is delivering his first Budget on Wednesday 28 October and there has been very little official steer on what it will contain.
If you own your home, have savings or a pension, or run a business, it is natural to wonder whether you should be doing something before then. The short answer is that a few of the rumours would matter a great deal if they happened, and most of them will not happen in the form being reported. There are also a handful of sensible steps that make sense whatever the Chancellor announces.
This article sets out what has already been confirmed and is on its way, what is being discussed for 28 October, and what we would suggest doing, and not doing, between now and then. As solicitors, our focus is on the legal side of the picture: your will, how your assets are owned, and the documents that decide what happens to them. The tax figures themselves are a conversation for your accountant or financial adviser, and we work alongside them.
What is already on the way
It is easy to lose sight of the fact that a good deal has already been decided. Even if the Budget contained nothing new for private wealth, the following changes are coming regardless.
- Tax thresholds stay frozen until 2031. The income tax personal allowance and the higher rate threshold are frozen until April 2031, and the inheritance tax nil-rate band of £325,000 has not moved since 2009. As house prices and savings grow, more families are drawn into tax without any rate changing at all.
- Pensions come into inheritance tax from 6 April 2027. Most unused pension funds and death benefits will count as part of your estate. For many people this is the single biggest change to their tax position in years, and we have written about what it means for executors and will makers in our guide to the pension changes in April 2027.
- Business and agricultural property relief has changed. Since 6 April 2026, 100% relief is limited to the first £2.5 million of qualifying business or agricultural property per person, with 50% relief above that. Business owners with a company worth more than this can now face an inheritance tax bill where there was none before.
- Investment income is taxed more heavily. Dividend tax rates rose by two percentage points in April 2026, and the rates on savings interest and rental income rise by two percentage points from April 2027.
- The cash ISA limit falls. From April 2027 the amount that can be put into a cash ISA each year drops to £12,000 for those under 65, although the overall ISA allowance stays at £20,000.
- A council tax surcharge on high value homes arrives in 2028. Homes valued at £2 million or more in 2026 prices will attract an annual charge starting at £2,500 and rising to £7,500 for homes worth over £5 million.
The direction of travel is clear, however. Whatever happens on 28 October, more estates are going to pay inheritance tax, and the assumptions behind a will written five or ten years ago may no longer hold.
What is being talked about for 28 October
The Government has committed not to raise the main rates of income tax, National Insurance or VAT, which is precisely why attention has turned to wealth, property and pensions. None of the following has been confirmed, and some of it has been actively played down, but these are the ideas being discussed seriously.
Capital gains tax
The most talked-about possibility is bringing capital gains tax rates closer to income tax rates. At the moment gains are taxed at 18% or 24%. If they were aligned with income tax, a higher-rate taxpayer selling a rental property, a share portfolio or a business could pay 40% rather than 24%.
The second idea is more technical, though it matters more for families. At present, when someone dies, the capital gains built up on what they own are wiped clean, and whoever inherits starts from the value on the date of death. There has been talk of ending this “uplift on death”. If that happened, a family could find themselves paying inheritance tax on an asset and then capital gains tax on decades of growth when they come to sell it. For anyone whose estate is built around a family home that has risen in value, a second property or a long-held investment, this would change the planning conversation entirely.
Inheritance tax and gifting
Gifting is the other area under the spotlight. Under the current rules, a gift you make falls out of your estate for inheritance tax if you survive it by seven years, with the tax tapering down from year three onwards. Ideas reported to be under consideration include stretching that period to ten years, removing the taper, capping the total value of gifts a person can make in their lifetime, and limiting the exemption for regular gifts made out of surplus income.
We would treat all of this with caution. The same ideas were floated before last year’s Budget and did not appear. Even so, gifting is the one area where timing could matter, because a change could be applied to gifts made after Budget day.
Pensions
The £268,275 cap on the tax-free lump sum comes up before every Budget, and it has come up again. It is worth noting that the Treasury has previously ruled out reducing it, and most commentators see little sign of significant pension changes this time. What we do know is that pensions are coming into inheritance tax from April 2027, and that is already reason enough to check who you have nominated to receive yours and whether that fits with your will.
Property
The Prime Minister has ruled out changes to stamp duty and played down talk of replacing council tax, so a wholesale reform of property tax looks unlikely this year. What has been reported is a possible lowering of the threshold for the high value council tax surcharge from £2 million to £1.5 million. That would roughly double the number of homes affected, and in parts of south Manchester it would bring in more family homes than people might expect. There has also been talk of higher capital gains tax on residential property for landlords and second home owners.
Business owners
Business property relief has already been reshaped, and further tightening is possible. Alongside that, there has been discussion of closing routes that owners use to take value out of a company on exit, such as capital distributions when a company is wound up. If you are planning a sale or a retirement in the next few years, it would be sensible to have the conversation about structure sooner rather than later.
A wealth tax
A 2% annual charge on assets above £10 million has been proposed by some within the governing party, and it makes for good headlines. Almost every serious commentator expects it not to happen, and the Prime Minister’s recent comments have pointed away from it.
Why the timing matters
Not every change works in the same way, and this is where the “should I act now?” question gets its answer.
Increases to capital gains tax can take effect from Budget day itself. That’s what happened in October 2024, when the new rates applied from the moment the Chancellor sat down. Changes to inheritance tax and income tax, by contrast, usually start from the following April, which gives people time to adjust. Changes to gifting rules could fall either way, and it is not unusual for a Budget to announce that new rules apply to anything done after the announcement.
Waiting to see what happens is a perfectly reasonable position on most fronts, but if you were already planning to sell an asset or make a substantial gift, it is worth knowing that the rules you are relying on may not be available after 28 October.
What is worth doing before Budget day
None of this requires dramatic action. These are the steps we would suggest to anyone who wants to be in a good position whatever is announced.
- Know what you have and how it is owned. A rough list of your home, savings, investments, pension and any business interest, with a note of whether each is held in your sole name, jointly, or through a company or trust. Most of the surprises we see in estates come from people not realising how an asset was held.
- Read your will. If it was written before April 2026, it was written before the business relief changes, and before pensions were due to come into inheritance tax. Our guide to why making a will in your 30s matters is a reminder of how quickly circumstances move, and that is just as true for a will written in your 50s.
- Check your pension nomination. The form you filled in with your pension provider decides who receives your pension, and it does not always match the will. From April 2027 the two need to work together, and this is a ten-minute job that can save a family a great deal.
- Think about gifts you were already going to make. If you had been planning to help a child with a house deposit or pass on savings, the current rules are known and generous. The caution is that you should only give away what you will not need, and giving away your home while continuing to live in it does not work for inheritance tax, however the rumours read.
- If you own a business, look at the succession documents. Your will, your shareholders’ agreement and your company’s articles need to say the same thing, and the inheritance tax position needs to reflect the £2.5 million relief cap. Our article on whether your will actually covers your company walks through the gaps we most often see.
- Put lasting powers of attorney in place. Budget or no Budget, these are the documents most often missing when a family needs them, and a review of your affairs is the natural moment to sort them. Our guide to lasting powers of attorney for elderly parents applies just as well to your own.
And what is not worth doing
Every year, people cash in pensions or sell investments in the weeks before a Budget on the strength of a newspaper headline, and some of them regret it. Withdrawals from pensions rose by more than a third in the year of the 2024 Budget, and a good part of that was put down to rumours that never materialised.
Selling an asset triggers tax now to avoid tax that may never come. Transferring property to children can create a capital gains tax bill today and can leave you exposed if a child’s marriage or business later runs into difficulty. Setting up a trust in a hurry, without proper advice, can bring its own tax charges. If a step only makes sense if the rumour turns out to be true, it is usually better to wait for the detail.
After 28 October
Once the Budget has been delivered, we will publish a short follow-up setting out what actually changed and what it means for wills, estates and family property. If you are an existing client, we will be in touch where a change affects planning we have done together.
Speak to our wills and trusts team
The Budget will come and go, and the rules will keep changing after it. The families who tend to be in the best position are those whose documents are up to date and whose planning is reviewed every few years rather than every time there is a headline.
Our wills and trusts team in Didsbury advises individuals and families across Manchester and the North West on wills, trusts, inheritance tax planning and lasting powers of attorney, and we work alongside your accountant or financial adviser so the legal and tax pictures fit together. If you would like to review where you stand before Budget day, or simply want to understand what the changes already on the way mean for you, please get in touch and we will be happy to talk it through.