Autumn Budget 2025: Key private wealth updates

The Chancellor’s Autumn Budget has introduced significant changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT). These measures will affect estate planning, succession strategies and the treatment of compensation payments.

Below we outline the key developments and what they mean for those affected. 

Capital Gains Tax & Employee Ownership Trusts (EOTs)

The most immediate for business succession is the dramatic reduction in the tax relief afforded to Employee Ownership Trusts (EOTs).

What has changed?

From 26 November 2025, disposals of shares to an Employee Ownership Trust will now qualify for only 50% Capital Gains Tax (CGT) relief. This means sellers must now pay CGT on half of their gain, with the other half deferred until the trustees ultimately dispose of the shares.

This is a significant step back from the previous regime, where 100% relief applied, which made EOTs a highly tax-efficient succession route.

Why the change?

The Treasury reported that the EOT scheme was proving far more costly than initially forecast, with outgoings on track for an estimated £2 billion compared with the original estimate of £100 million.

The reduction is therefore designed to balance the objective of supporting employee ownership with the need for fiscal sustainability.

Implications for business owners

EOTs remain attractive for cultural and succession reasons, but the tax incentive is now significantly weakened. Owners considering EOT transfers should revisit their plans urgently, as the change applies immediately.

Alternative succession routes (such as family transfers or third-party sales) may now warrant closer consideration given the reduced tax benefit.

Practical tips for advisers and owners

• Review any planned EOT transactions immediately.
• Model the revised CGT liability under the new 50% relief rules.
• Consider alternative succession strategies if tax efficiency is the overriding priority.

Inheritance Tax: Agricultural & Business Property Relief (APR/BPR)

What has changed?

From April 2026, the £1 million cap on Agricultural Property Relief (APR) and Business Property Relief (BPR) relief per individual will become transferable between spouses and civil partners. This change means couples can now shelter up to £2 million of qualifying assets from Inheritance Tax (IHT) at the 100% relief rate.

However, any value above this threshold will continue to attract only 50% relief. It is noted that transitional rules already apply to gifts made since October 2024.

Implications

The £1 million cap remains frozen. This is the primary concern, as it will not rise with inflation or asset values. As farmland and business valuations continue to increase, more estates will breach the cap, exposing families to higher IHT bills.

Farming families and business owners gain greater flexibility in succession planning due to the transferability, Any unused portion of the £1 million allowance will be transferable between spouses and civil partners, even where the first death occurred before 6 April 2026. However, the measure does not go far enough to protect larger estates. 

Cohabiting couples remain excluded, so careful structuring is still essential.

Families with significant holdings may still face substantial tax exposure, even with the new transferable allowance.

Practical tips for estate planning 

• Review estate plans immediately if farming or business assets exceed the cap.
• Structure wills to maximise the transferable allowance between spouses and civil partners.
• Factor in the reduced 50% relief for assets above the cap when modelling future liabilities.
• Consider lifetime giving strategies, bearing in mind transitional rules already apply to gifts made since October 2024.
• Monitor policy developments, as further adjustments may be announced before April 2026.

Inheritance Tax: Infected Blood Compensation

What has changed?

Payments made under the Infected Blood Compensation Scheme are now fully exempt from IHT, regardless of how they are inherited or transferred.

The first living recipient will have two years from the date of receiving the compensation to gift some or all of it, without incurring any IHT implications, including the 7-year rule. This exemption applies universally, ensuring that compensation payments are never diminished by tax charges.

Implications for affected families

Families affected by the infected blood scandal will no longer face IHT liabilities on compensation designed to redress historic injustice. Executors and advisers must treat these payments as outside the scope of IHT, ensuring they are not mistakenly included in taxable estate calculations.

The exemption provides clarity and fairness across generations, allowing compensation to pass through estates without erosion from taxation.

Practical tips for executors

• Check whether any infected blood compensation payments have been received and ensure they are correctly identified.
• Make sure executors and professional advisers are aware of the exemption when preparing IHT returns, probate applications, or estate accounts.
• Keep copies of award letters, payment confirmations, and related correspondence with estate planning records to provide clear evidence of exemption if queried by HMRC.
• Consider including a clause or executor’s note in wills to highlight the treatment of infected blood compensation payments, reducing the risk of misreporting.
• Ensure family members understand that these payments are exempt, so they are aware of the financial and tax implications when inheriting.

International issues including formerly Non‑UK Domiciled Individuals (Non‑Doms)

What has changed?

The government has proposed a cap on IHT charges for pre-30 October 2024 excluded property trusts at £5 million over a ten-year cycle.

The government will seek views on further reforms to the global talent visa, with the aim of attracting more high‑level entrepreneurial talent to the UK. The government will explore how immigration and tax policy can be aligned to make the UK more competitive internationally.

Implications

The IHT cap is designed to provide greater certainty for non-dom individuals using trust structures and to address concerns that punitive taxation has driven ultra-high net worth individuals away from the UK.

The comments on the global talent visa consultation signal a broader effort to encourage inward investment and entrepreneurial activity, though details of any associated tax incentives have not yet been confirmed.

Practical tips

• Review existing trust structures to assess exposure to IHT charges under the proposed £5 million cap, effective from 6 April 2026.
• Monitor any further announcements on the global talent visa consultation, particularly if considering relocation or investment in the UK.
• Seek advice on how these measures may interact with existing international regimes and long-term estate planning.

Conclusion: A time for urgent review 

The Autumn Budget reflects a tightening of reliefs alongside targeted corrections to anomalies, but does this go far enough? It is clear estate and succession planning must adapt quickly. Reviewing structures now will ensure that your planning remains as efficient as possible and aligned with your family’s goals.