UK Autumn Budget 2025: Why you need to review your Will

Whilst the 2025 Budget did not introduce sweeping reforms to inheritance tax as had been widely speculated, the lack of increased allowances is still likely to affect the existing long term estate planning for many individuals. Now is an essential time to reconsider whether your existing will remains fit for purpose.

The changes and what effect that may have on estate planning

The Inheritance Tax thresholds remain unchanged. The inheritance tax (IHT) nil-rate band remains at £325,000 per person and the additional residence nil-rate band (RNRB) remains at £175,000. Whilst it’s good news these haven’t been reduced or scrapped, many asset values continue to rise, meaning more estates are becoming taxable than ever before. Many estates that previously fell comfortably below the threshold may now exceed it.

The Budget has introduced a new “mansion tax”, a recurring council tax surcharge on properties valued over £2 million. From April 2028, homeowners of such properties will face an additional annual charge on top of existing council tax charges. Owners of high value property may find themselves asset rich but cash poor, especially where the property is the largest part of the estate. The imposition of a recurring mansion tax further increases the ongoing cost of holding on to such assets, which may be problematic for older clients or those reliant on income outside capital.

Further changes including increases in taxes on dividends, savings and property income, and tighter rules around pension related tax advantages, have been announced. These changes will impact people’s cashflow and overall wealth and are likely to mean that many estate plans which rely on people’s income (for example, by making lifetime gifts or gifts out of surplus income) could no longer be appropriate for their circumstances. Gifting remains a useful tax planning tool, but it is essential to seek professional guidance before making any decisions in this regard.

Next steps

It is an essential time to review existing wills and estate planning which could now be outdated or inefficient. Although this Budget has frozen thresholds rather than changed them, further reforms cannot and must not be ruled out. Existing wills and estate plans must be reviewed to ensure they remain fit for purpose.

The 2025 Budget marks a tipping point for estate planning in the UK. For many, what was once effective and efficient may now be inadequate. Now is the opportune moment to revisit and review existing Wills or if you don’t have a Will already, to speak to us regarding creating one.

Please get in touch with the Private Wealth & Succession team on 0113 207 0000 if you have any questions.