- within Consumer Protection, Antitrust/Competition Law and Privacy topic(s)
The hotly anticipated Budget was finally announced yesterday, after much speculation and media noise. Rachel Reeves' statement was somewhat overshadowed by the accidental early release of details by the Office for Budget Responsibility (OBR). However, that does not change its substance and there are a few key announcements which are important for individuals, families and family businesses.
Inheritance tax
A welcome announcement in relation to the upcoming changes to inheritance tax for businesses and farms. In the last Budget, Reeves announced that business relief and agricultural relief would be restricted to give each individual a £1 million allowance below which no inheritance tax would be payable – with business and agricultural assets above that allowance attracting tax at 50% of the usual inheritance tax rate (so a rate of 20% applying).
When the changes to business relief and agricultural relief were initially announced, it was clear that the £1 million allowance was not going to be transferable between spouses (as other inheritance tax allowances are) – meaning that many business and farming families were having to undertake planning to move assets across into their spouse's name to ensure that the allowances available to both spouses could be used, and would not be lost.
Yesterday, Reeves announced that the £1 million allowance
will be transferable between spouses, mirroring the position for
other inheritance tax allowances. This is good news and a welcome
change from the original position.
It was also announced that inheritance tax thresholds will remain
frozen until at least April 2031.
Any payments made to parties from the Infected Blood Compensation Scheme are to be exempt from inheritance tax – a provision which was lobbied for ahead of the Budget.
Income tax
Whilst there were no increases to tax rates on employment income, there were increases and changes announced to how other forms of income are taxed:
- a two percentage point increase to the ordinary and upper rates of income tax on dividend income from April 2026
- a two percentage point increase to income tax on savings income from April 2027
- the creation of separate tax rates for property income from April 2027 – with the property basic rate to be 22%, the property higher rate to be 42%, and the property additional rate to be 47%
Salary sacrifice
From 2029, there will be a cap of £2,000 on pension contributions which can benefit from salary sacrifice for national insurance purposes.
ISAs
Whilst the total annual subscription limit for ISAs will remain at £20,000, within that limit there will be a reduced cash limit of £12,000 which can be paid into a cash ISA each year, with the remainder reserved for contributions to investment ISAs only. The reduced cash limit will not apply to over 65s.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
