Chancellor Rachel Reeves delivered her Budget on 26 November 2025, following an unusual early release of growth forecasts by the Office for Budget Responsibility. With an emphasis on economic stability and support for working families, the Budget introduced a mix of tax changes and longer-term fiscal planning measures.
While much of the media coverage focused on household finances, several announcements may have important implications for personal wealth management, estate administration and long-term planning. Below, we summarise the key points and explain how they could affect you.
Income Tax and National Insurance Threshold Freezes Extended to 2031
The freeze on income tax and National Insurance thresholds—originally due to end in 2028—has been extended to 2031.
Often described as a “stealth tax”, frozen thresholds mean that as incomes rise, more people are drawn into higher tax bands. This may increase the tax you pay both in working life and, indirectly, when managing an estate that generates taxable income during administration.
ISA Allowance Changes from April 2027
The overall ISA limit remains at £20,000 per year. However, the way this allowance can be used will change:
– Cash ISA contributions will be capped at £12,000, representing 60% of the total allowance.
– The remaining £8,000 must be invested into stocks and shares ISAs.
– Individuals aged 65 and over will be exempt from this rule and may continue to place the full £20,000 in cash ISAs.
These changes may influence how savings are structured in later life and could form part of broader estate and tax-efficient planning.
2% Increase in Tax Rates for Property, Savings and Dividend Income
From April 2027, income earned outside of employment—such as property rents, savings income and dividends—will be taxed at rates 2% higher than before.
For estates in administration, this is especially relevant. Estates pay income tax on revenue earned during the administration period, meaning executors may face increased tax liabilities before distributing assets to beneficiaries.
Pension Salary Sacrifice Changes from 2029
From 2029, pension contributions made via salary sacrifice will attract National Insurance if they exceed £2,000 per year. This reform aims to limit the tax advantages available through these arrangements and may influence retirement and estate planning strategies for higher earners.
Inheritance Tax (IHT): Key Updates
Although IHT was not the central focus of the Budget, the Chancellor confirmed two notable changes:
1. Infected Blood Compensation Payments Exempt from IHT
Compensation received under the Infected Blood Scheme will now be excluded from Inheritance Tax calculations. This provides reassurance for affected families that compensation will pass to beneficiaries free of tax.
2. Business Property Relief (BPR) and Agricultural Property Relief (APR) – Further Reform
BPR and APR has undergone significant reform since 2024:
– Before 2024, APR provided 100% relief on Agricultural property regardless of value.
- – In October 2024, relief was capped at £1 million per person, prompting concerns—particularly for family-run farms.
- – The 2025 Budget now allows unused APR and BPR to be transferred between spouses or civil partners on first death, similar to the transferable nil-rate band.
This means that couples can now access a combined £2 million of agricultural relief and business relief, without needing to reorganise ownership or make gifts on first death simply to preserve tax allowances. However, agricultural land above this value may still attract IHT, as will business property above this level.
What Should You Do Next?
The 2025 Budget introduces several measures that may affect personal taxation, inheritance planning and estate administration. The impact will vary depending on your financial circumstances, the nature of your assets and any business or agricultural interests.
It is advisable to:
- – Review your Will to ensure it still reflects your wishes and makes best use of available tax allowances.
- – Consider the impact of threshold freezes and rising taxes on long-term plans.
- – Seek independent financial advice to assess how these changes may affect investments, pensions and estate structures.
- – Discuss estate planning with a solicitor, particularly if you hold agricultural land, substantial investment income, or complex assets.
If you would like tailored advice on how the Budget may affect your estate planning, our Wills Trusts and Probate team is here to help.
The contents of this post do not constitute legal advice and are provided for general information purposes only ■
