Looking ahead to the UK Autumn Budget 2026: Everything individuals need to consider

The UK Autumn Budget 2026 is on the 28th October, and with it the buzz of questions is already in full swing from families, business owners and investors: Will Inheritance Tax change again? Are pensions really going to form part of your taxable estate? Is it time to sell, gift or restructure?

No one can foresee what will be announced, but what we can do is separate the three things that matter: what is already settled, what is being speculated about, and what you can sensibly do now, whatever happens. In this article, we discuss 5 key things we believe individuals should consider ahead of the UK Autumn Budget 2026.

1. Inheritance Tax (IHT)

What we know

• The nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen, so more estates are being drawn into IHT as asset values rise.
• The standard rate remains 40% on the value of an estate above available allowances.
• Social care funding is now firmly on the political agenda. At the Labour Party conference on 29 September, the Prime Minister announced plans for a National Care Service for England, to be funded in part by changes to the state pension triple lock from April 2030. The triple lock itself is unchanged for now, and the change would only take effect after the next general election.
• The announcement did not include a change to inheritance tax. Press reports of a flat 10% levy on all estates were met with a Government statement that there were “no plans for this”, and the Prime Minister’s speech did not introduce one.
• While the detail of the National Care Service remains to be developed, the announcement highlights the growing political focus on how long-term social care will be funded in the future.

What might happen

Further changes to thresholds, reliefs or lifetime gifting rules cannot be ruled out, particularly given pressure on public finances. At this stage, though, that is speculation rather than fact.

What you can do now

• Know your number. Work out your likely estate value, including pensions, property and business assets, and what IHT would be payable today.
• Review your Will and any trusts. Out-of-date documents can cost families more than any tax change.
• Start gifting conversations early. Regular gifts from surplus income, use of annual exemptions and larger lifetime gifts all work best when planned well ahead, as some gifts must be survived by seven years to fall outside the estate.
• Consider life assurance written in trust to help fund a future IHT bill outside the estate.

2. Pensions and IHT

What we know now

The Government’s plans to bring unused pension funds into the inheritance tax (IHT) net from April 2027 are moving closer to reality.

While the principle hasn’t changed, we now have much more clarity on how the rules will work in practice and, importantly, who will be responsible for paying the tax.

What will happen from April 2027?

Most unused pension funds and death benefits will form part of an individual’s estate for IHT purposes.

• Pensions left to a spouse or civil partner should continue to benefit from the spouse exemption.
• Pensions left to children or other beneficiaries could face IHT of up to 40%.
• In some cases, beneficiaries may also pay income tax when they draw the funds.

Following consultation, the Government has confirmed that executors, not pension schemes, will be responsible for reporting and paying any IHT due. Pension schemes will have four weeks to provide a valuation once notified of a death, and beneficiaries will ultimately share responsibility for any tax relating to benefits they receive.

The six-month deadline for paying IHT remains unchanged.

One positive development is that death-in-service benefits paid through registered pension schemes will remain outside the scope of IHT. This removes a concern that many employers and employees had following the original proposals.

What you can do now

For years, many people have treated their pension as the last asset to spend, preserving it for future generations. From April 2027, that strategy may no longer be the most tax-efficient.

That doesn’t mean everyone should start withdrawing pension funds. Far from it. But it does mean that pensions should now be reviewed as part of a wider estate planning strategy rather than viewed in isolation. We recommend:

• Reviewing whether your current drawdown strategy is still appropriate.
• Checking that your expression of wish forms are up to date.
• Making sure your executors know where all your pensions are held.
• Considering how any future IHT liability could be funded.
• Exploring whether gifting surplus pension income might form part of your planning.

Our overall message is not to panic. Although the administration of the new rules is still being refined, the direction of travel is clear. Some clients have asked whether the changes could be delayed or withdrawn. While the consultation altered the mechanics of the regime, the Government has repeatedly confirmed its intention to bring pensions within the IHT framework.

The key message is simple: don’t make rushed decisions, but don’t ignore the changes either. Now is a good time to review how pensions fit into your wider estate and succession planning arrangements.

3. Agricultural and Business Relief (AR/BR)

What we know

• From April 2026, 100% relief on qualifying agricultural and business assets is capped at £2.5 million per person, with 50% relief above that.
• Careful planning around ownership, spouse and civil partner transfers and succession can make a significant difference to how the cap applies.

What might happen

Farming and family business groups continue to press the Government for changes, and there has been speculation that the cap may be revisited. Nothing has been confirmed, and clients should not assume the rules will be reversed or softened.

What you can do now

• Value your assets properly. Many farms and family businesses are worth more than owners think, and a clear valuation is the foundation of any plan.
• Review ownership and structure. Who owns what, and in what proportions, affects how the cap is used between spouses and across generations.
• Plan succession early. Bringing the next generation into ownership gradually can reduce the shock of a future IHT bill.
• Consider liquidity. Many estates are rich in assets but short of cash. Think now about how any IHT liability would be funded without forcing a sale.

4. Capital Gains Tax (CGT)

What we know

• The main CGT rates are 18% and 24%, following changes made in October 2024.
• On death, assets currently receive a CGT uplift to market value. This means gains built up during a lifetime are not taxed when assets pass to beneficiaries.

What might happen

CGT is one of the most closely watched areas ahead of the Budget. Commentators have speculated about higher rates, alignment with Income Tax rates, changes to reliefs (in particular Business Asset Disposal Relief), or an end to the CGT uplift on death. None of this has been confirmed.

What you can do now

• Use your annual exempt amount each tax year, and consider using your spouse’s too.
• Think about the interaction with IHT. Gifting an asset can take it out of your estate but may trigger a CGT bill now, while holding it until death may expose it to IHT but wipe out the gain. The best answer depends on the asset and the family.
• Review business sale timing and structure. If you are thinking of selling, structuring and timing matter. Take advice before deciding, not after.
• Keep property and investment records. Accurate base costs make gain calculations, and future planning, far easier.

5. Personal and Income Tax

What we know

• Income tax thresholds remain frozen, which means more of your income is taxed at higher rates as earnings rise.
• Tax rates on savings and rental income are due to rise by two percentage points from April 2027.
• The cash ISA limit is due to fall to £12,000 a year for under-65s from April 2027.

What might happen

There is regular speculation about changes to Income Tax rates, thresholds and allowances, including the possibility of raising the personal allowance or other tax-free allowances. Speculation is not a plan, and the Government has so far said little.

 

What you can do now

• Use your allowances. ISAs, pension contributions, the personal savings allowance and the dividend allowance should all be considered each year.
• Review where your savings and investments sit. With tax rising on some forms of income, holding the right assets in the right wrapper matters more than ever.
• Plan income across a couple. Making sure both partners use their allowances and lower tax bands can make a real difference.
• Look at your whole picture. Income Tax, CGT and IHT interact. Looking at each in isolation can lead to decisions that save tax in one place and cost it in another.

The bottom line

No two families are the same, and the right plan depends on your assets, your goals and the people you want to look after.

• Act on what we know. The pension and IHT changes, the AR/BR cap and the 2027 changes to savings and ISAs are all announced.
• Prepare for what is plausible. Know your numbers, review your documents, and have the conversations in advance.
• Avoid irreversible decisions based on speculation. Gifting, selling, restructuring or drawing down a pension simply because of a headline can be costly to undo.

If you would like to talk through how any of this applies to you, our Private Client team would be happy to help. Please don’t hesitate to get in contact with Jill Walker, Paula Fraser, or your usual AAB contact.