Phew!
Those were the words that left my lips as the Chancellor sat down yesterday. Or, I should say, half an hour before she even stood up – following the unprecedented leaking of the whole OBR document before the Budget statement had even begun!
It was quite amusing watching the BBC team react in real time to the scale of this leak and then the joyful look on their faces when they realised that, yes, we really do have pretty much the whole contents of the Budget before it has even been announced!
That aside, the actual announcements were, for the most part, already known or expected. Yes – there were a few bits of detail coloured in, but on the whole we knew about pretty much all of the major items (whether this was intentional or not remains to be seen).
On a serious note though, from an Estate Planning perspective, we did have what seemed to be a very light (read: nothing changed) budget. This was despite the various rumours and speculation that gifting allowances might be imposed or the long standing 7 year rule could turn into 10, or even 14 years.
This is very good news. As I wrote a few weeks back, we remain, for the time being at least, in a death duty regime of extreme contradiction. On the one hand, we have one of the harshest IHT regimes in the world, on the other, we have pretty much unlimited capacity to avoid or mitigate our IHT bills.
Once again, the message here is clear – let’s act now, while we can. Given how late this year’s Budget was held, it is realistic to assume that we might only have 11 months until the next one. If this year is anything to go by, that means the rumour mill about next year’s Budget might start as soon as July – just 8 short months away!
Now that is a scary thought!
Of note this time around, the IHT thresholds were frozen for another year up to 2031. If nothing else, this does signify that the Government is pretty set on their current trajectory around Estate Planning – we have said it before and we will say it again – under this current Government I think we can safely say nothing is going to get better in the Estate Planning world, but it could well get worse.
We also had confirmation that the new £1m allowance for business and agricultural assets will be transferable between spouses on the first death – an imminently sensible and practical move that will avoid the need for a lot of rather awkward planning.
Away from Estate Planning, there were a few other minor tweaks in the personal finance space which are noteworthy;
The Cash ISA allowance will reduce to £12,000 (as part of the wider £20,000 allowance) for those under the age of 65. While this was largely expected (and not as bad as feared), it does nothing to deal with the accusations that the ISA system is again becoming needlessly complex.
VCT tax relief was also cut from 30% down to 20% from April 2026 – a move that will impact on a small group of people, but in a fairly significant way.
Finally, we had the news that we would see a 2p increase in the rates of tax for Dividend, Savings and Rental income. Not totally unexpected, but unwelcome nonetheless and will make the UK tax system yet more complicated with different rates now applying on different types of income.
We have our full budget analysis now prepared, and we will discuss what was (and wasn’t) changed in our next Webinar on 2nd December – we hope to see you there.
