What the November 2025 Budget Means for Your Estate Planning

Since the publication of this article, the government has updated its approach to Agricultural and Business Property Relief, increasing the threshold for 100 per cent relief from £1 million to £2.5 million (effectively £5 million for couples) ahead of the changes taking effect from April 2026, reflecting significant feedback from the farming and rural business community.

The November 2025 Budget was far more reserved than many in the estate planning world expected. While earlier speculation suggested sweeping reforms, the final announcements were focused on confirming details from the prior budget. Even so, several confirmations and clarifications were made that are relevant for anyone reviewing their Will or thinking about planning for the future.

November 2025 Budget Changes at a Glance:

• Inheritance Tax (IHT) thresholds remain frozen until April 2031, increasing the likelihood that more estates will fall into tax over time.
• Business and Agricultural Property Relief changes were confirmed for April 2026, introducing a £1 million threshold before tax. Any unused allowance can be transferred to a spouse or civil partner, giving couples a combined allowance of up to £2 million.
• This budget reaffirmed that pensions will be included in the taxable estate from April 2027.
• Charitable giving rules were clarified, with IHT exemption applying mainly to gifts made directly to UK-registered charities.
• Residence-based IHT rules for non-doms were clarified in the November 2025 Budget. The regime, which came into effect in April 2025, affects offshore trusts and how long-term UK residents are taxed on non-UK assets.

Inheritance Tax Thresholds Frozen Until 2031

One of the main confirmations in the November 2025 budget was that the Inheritance Tax (IHT) thresholds will stay frozen until April 2031, extending the freeze by an additional year beyond the previously planned end date of 2030.

This includes:

• The Nil-Rate Band (NRB): The £325k allowance available to everyone.
• The Residence Nil Rate Band (RNRB): An extra £175k individuals get when leaving a property to a qualifying descendant, such as a child or grandchild.
• The £2 million taper threshold: the point at which the RNRB begins to taper, reducing by £1 for every £2 that an estate exceeds £2 million.

Although no new measures were introduced, extending the freeze means more estates may gradually fall into IHT as property prices continue to rise.

If you have not reviewed your estate planning in some time, now is a sensible time to do so, as you may be closer to the IHT thresholds than you realise.

Business and Agricultural Property Relief changes confirmed for April 2026

This budget also reaffirmed the upcoming changes to the Business Property Relief (BPR) and Agricultural Property Relief (APR), which will take effect from April 2026.

These reliefs previously allowed qualifying business and agricultural assets to be passed on with little or no inheritance tax. However, the government announced in the previous budget that it would introduce a cap on how much can benefit.

The key points are:

• A new £1 million per-person threshold will apply before tax becomes due on qualifying business or agricultural assets.
• Any unused allowance can be transferred to a spouse or civil partner, meaning couples may benefit from up to £2 million when combined. This applies even if the partner had died many years before April 2026, provided their allowance was unused.
• Above the £1 million allowance, qualifying assets will receive a 50% relief, resulting in an effective tax rate of 20%, instead of 40%.
• Any tax due on assets above the threshold can be paid over 10 years, with no interest.

The introduction of a transferable allowance is a welcome improvement, bringing Business and Agricultural Relief in line with other transferable IHT thresholds.

Unused Pension Pots to be Included in Estates from April 2027

More details on the upcoming changes to pension taxation were also announced. From April 2027, any unused pension funds will be treated as part of a person’s estate for Inheritance Tax.

This means:

• Executors will need to include the value of any untouched pension pots when applying for probate.
• Pension providers may now hold back part of the payment if needed to help cover any tax owed.
• The rules apply whether or not the pension scheme has discretion over who receives the benefits.
• Certain payments, such as death-in-service lump sums or transfers to spouses, will still fall outside of IHT.

Pensions have been one of the most tax-efficient assets to pass on in recent years, so this change may influence how people choose to use or preserve their pension savings in future.

Clarification on Charitable Giving

There was also a small but important update to how charitable gifts are treated for Inheritance Tax. The rules are being tightened so that the exemption will apply primarily to gifts made directly to UK-registered charities.

For most people who leave a straightforward gift to a recognised UK charity in their Will, nothing needs to change. The update is only likely to affect more complex arrangements.

Residence-Based IHT Rules for Non-Doms

Finally, additional guidance was provided on the newer residence-based IHT regime introduced earlier this year. The updated detail confirms that long-term UK residents may now be within scope for IHT on their worldwide assets, depending on how many years they have lived in the UK. It also explains how the rules will apply to offshore trusts, which may face UK IHT charges based on the residence history of the person who originally created the trust.

These updates are mainly relevant to those with internal ties or assets held overseas. Anyone in this position should seek tailored advice to ensure their estate planning remains tax-efficient.

How ELM Legal Services Can Help

At ELM Legal Services, we can help you make sense of these changes and build an estate-planning strategy that fits your circumstances.

Whether you want to review your Will, explore the use of trusts, understand how the new pension rules might affect your estate, or check the impact of Inheritance Tax and charitable giving on what you leave behind, our specialist team can provide clear, practical advice.

If you would like to talk through your options, please get in touch with us for a free, no-obligation, chat today.