What the Budget means for inheritance disputes

We’re sure many of you will have had a chance to watch or at least read up on the Autumn Budget broadcast earlier today. In a significant political development, Chancellor Rachel Reeves delivered Labour’s first budget since 2010, marking a notable shift in the country’s financial policies. This also marked her as the first female chancellor to do so.

A few stand-out points

The central talking point of the budget was Labour’s decision to raise taxes by £40bn. We also saw changes to National insurance, with contributions for employers increasing by 1.2 percentage points to 15% from April 2025 (this doesn’t involve employees). Employers will now start paying National Insurance will fall to £5,000 a year, raising £25bn per year.

But how does the budget affect inheritance disputes?

It was announced that Labour will continue with the inheritance tax freeze. This freeze will, therefore, continue for a further two years until 2030. The freeze allows individuals to inherit the first £325,000 tax-free, which will rise to £500,000 if the estate is passed to direct descendants, and £1m if it’s passed to a surviving spouse or civil partner.

For a professional perspective on the Autumn Budget, we turn to IDR Law Partner Richard Thomas, who shares his insights and views on the implications of the budget:

“Considering the raft of pre-Budget horror stories concerning the potential changes to IHT and other death-related taxes and exemptions, the actual Budget was fairly benign. However, whilst the majority of the tax fundamentals remain unchanged for most families, the freezing of the current nil rate bands for a further two years – until 2030 – will have a significant impact and catch more and more families as the decade unfolds. In terms of inheritance disputes, anything which reduces the ‘pot,’ or which might provoke families into trying to hurriedly gift or dispose of assets in a bid to reduce the IHT burden, is unlikely to slow down the current rate of disputes; even if many of the basic rules remain unchanged. Looking further ahead, perhaps the most significant change comes from April 2027, when inherited pensions will move into the remit of IHT. This will eat up the nil-rate band even more quickly, snaring a greater number of estates into the IHT net.  For some, the biggest impact will come from the changes due to agricultural property relief and business property relief from April 2026, which will undoubtedly make it harder for some to keep family-owned farms and businesses together. It is difficult to see this as anything other than a further difficulty to overcome when considering disputes relating to such assets, and perhaps something which will lead to more acrimony as the external pressures become greater.”