The Autumn Budget has brought with it significant changes and it’s therefore important to begin making plans for the April 2025 tax season.

While April may seem far off as we near the end of the calendar year, early preparation is crucial to ensure your financial stability remains secure and resilient against new tax liabilities.

So, how can you protect your wealth and make the most of the changes ahead?

Preparing for Inheritance Tax changes

With major adjustments to Inheritance Tax (IHT) reliefs, estate planning is set to become more intricate, especially for those with business and agricultural assets.

Key changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) are likely to affect families hoping to pass down family businesses.

Mike Bagg, Tax Partner, at Milsted Langdon advises, “With APR and BPR now capped at 50 per cent for assets above £1 million from 2026, families will need to carefully consider how to structure these assets to optimise tax efficiency.

“For some, this may mean exploring different options, such as trusts or alternative succession plans, to retain family wealth across generations.”

The removal of the IHT exemption on pensions from 2027 is also a key development that has the potential to put significant financial strain on families.

Mike states, “Pension fund trustees may need to adjust their plans to ensure they have sufficient liquidity to cover tax liabilities for their beneficiaries.

Some pensioners may also be considering drawing on their pensions early to fund their retirement.

However, if this is your plan, it’s important to proceed with caution to ensure you don’t run out of funds to cover your basic needs before you pass away.

Mike suggests: “A structured withdrawal plan, aligned with your retirement goals and anticipated expenses, can help extend the life of your pension savings.

“Additionally, be mindful of the tax implications of drawing down larger amounts, as this could push you into a higher income tax bracket.”

“I strongly recommend reviewing your estate planning strategies with a specialist as soon as possible, given the significant impact these adjustments could have on IHT liabilities.”

Managing Income Tax

While Rachel Reeves’ decision to lift the freeze on Income Tax thresholds from 2028 may seem distant, there’s still a clear need to prepare for the ongoing impact of fiscal drag in the interim.

Mike notes, “While the return to some inflation-linked thresholds is positive, taxpayers need to stay aware of how the frozen thresholds affect their tax banding in the coming years.

“If your income is close to a threshold, you might consider contributing to pension funds or other tax-efficient schemes to mitigate potential tax increases.

“Simple actions now, such as salary sacrifice arrangements, can provide meaningful savings over time, especially for those so close to the higher tax brackets.”

Strategic timing for asset sales

The immediate increase in Capital Gains Tax (CGT), with the lower rate increasing to 18 per cent and the higher rate rising to 24 per cent, is another blow – although anticipated – for business owners looking to sell.

However, the Business Asset Disposal Relief (BADR) rate is not due to increase until April 2025. This provides those of you planning to sell business assets a chance to act quickly and take advantage of the lower 10 per cent rate before it increases.

Mike advises: “If you’re planning to sell significant assets in the coming years, early planning could save thousands in CGT. You need to make sure of the reliefs currently available whilst they are at more favourable rates.

“In some cases, even transferring assets to a spouse could allow for lower-rate tax treatment, so take advantage of such options where applicable.”

ISA planning

The announcement that ISA subscription limits are being frozen until 2030 requires individuals to rethink their short and long-term saving strategies.

While ISAs remain valuable, the freeze makes it all the more important to fully utilise allowances each year.

Mike says: “The freezing of these limits means that the real value of this allowance will decrease over time. What costs £20,000 today may only have the purchasing power of £17,000 or less in a few years’ time. So, while the limits appear generous now, inflation will effectively reduce the impact of those contributions in the future. Individuals need to act swiftly to contribute the maximum allowed to protect against the diminishing value of their savings.”

Another option to explore is to diversify your investments within ISAs. Perhaps looking into how stocks and shares ISAs, Lifetime ISAs or Junior ISAs could boost your potential for returns over the long term.

Preparing in advance

In light of the impending changes, the time to act is now.

“If you are concerned about the implications of the Autumn Budget on your wealth and need assistance with your strategic estate planning, you should seek specialist advice on how to identify and leverage tax reliefs, allowances, and structures that help mitigate your liabilities,” says Mike.

Get in touch with Milsted Langdon to arrange a consultation and start preparing for the April tax season with confidence before 2024 comes to a close.