The Autumn Budget: Changes to Capital Gains Tax and Inheritance Tax
Following today’s highly anticipated Autumn Budget announcement, Claire Woolliscroft looks at the key changes to Capital Gains Tax (CGT) and Inheritance Tax (IHT) that have been announced.
Following today’s highly anticipated Autumn Budget announcement, the key changes to Capital Gains Tax (CGT) and Inheritance Tax (IHT) have been announced as follows.
Capital Gains Tax
The Government are to increase the lower rate of CGT from the current 10% to 18%, and from 20% to 24% for higher rate taxpayers. However, they are maintaining the current rates in respect of residential property (at the lower rate of 18% and higher rate of 24%).
The Government also announced that they are maintaining the lifetime limit at £1 million for Business Asset Disposal Relief. This relief will be maintained at its current rate of 10% this year, increasing to 14% in April 2025 and 18% from 2026/27.
Inheritance Tax
The Government are to extend the freeze on IHT rates brought in by the previous government until 2030. This means that the first £325,000 of an estate continues to be tax free, increasing to £500,000 where a person is leaving their home to their direct descendants (children or grandchildren), and rising to £1 million where a tax-free allowance is passed to a surviving spouse or civil partner.
From 2027, inherited pensions are to attract IHT. This will be a huge blow to many people who have spent years investing their earnings in pension vehicles as a legitimate Inheritance Tax planning mechanism.
The Government are also to reform Agricultural and Property relief.
From April 2026, the first £1 million of combined business and agricultural assets will continue to attract no IHT. However, for assets over £1 million, IHT will apply with 50% relief at an effective rate of 20%. Again, this fundamental change in how farming families and families with businesses are treated will have a real impact on many of our clients.
The Government have also committed to a 50% relief in all circumstances for shares on the Alternative Investment Market (AIM) and other similar markets.
With the Government today announcing that only 6% of all estates are to pay IHT this year, they maintain that while 3/4 of IHT claims should remain unaffected by changes, the new measures should raise £2 billion by the final year of the forecast.
If you would like advice or assistance on any of the new changes, Leathes Prior are here to help.
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Leathes Prior is delighted to be supporting the Sue Lambert Trust as our Charity of the Month for February 2026. Sue Lambert Trust is a leading charity in Norfolk offering free therapeutic counselling and support services to survivors of sexual violence and abuse.
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In February 2026, the Supreme Court passed a ruling which is set to significantly increase the amount of damages the NHS may have to pay for claims brought in respect of children injured at birth, as a result of medical negligence.
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Putting LPAs in place allows you to choose trusted people to make decisions for you if you lose capacity in the future. This avoids the need for loved ones to make a costly and time-consuming deputyship application to the Court of Protection. With more people likely to experience conditions affecting capacity, more families may need to turn to the Court for support where no LPAs are in place.
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