Chancellor John Healey delivered his first Autumn Budget on Wednesday 28 October 2026.

Although the Budget did not introduce the significant changes to Inheritance Tax that had been anticipated, there were several important announcements for private clients, particularly in relation to trusts, pensions, property and savings income, and business succession planning.

Here we consider some of the key developments and what they could mean for individuals, families and business owners.

Inheritance Tax: changes to liabilities relating to trusts

The government is introducing changes to the way liabilities are treated when valuing assets held in trusts for Inheritance Tax (IHT) purposes.

The changes are intended to prevent arrangements involving debts from being used to reduce the taxable value of settled property in circumstances where the deduction would not reflect a genuine reduction in value.

Under the revised rules, liabilities properly incurred by trustees when acting on behalf of a trust will generally be taken into account when valuing trust assets, subject to existing restrictions within the IHT legislation. However, the rules will restrict deductions where liabilities arise from certain arrangements involving value originating from a settlor or beneficiary.

The changes will apply to transfers of value and occasions on which IHT becomes chargeable on or after 28 October 2026.

Trustees and individuals with existing trust arrangements should consider whether the changes affect their current structures and any future planning.

Pensions: changes affecting beneficiaries and estate administration

There were no major new pension reforms announced in the Budget, but several changes will be relevant to pension beneficiaries, personal representatives and those involved in estate administration.

The key announcements include:

Removal of the two-year rule for certain pension death benefits: For payments made on or after 28 October 2026, lump sum death benefits relating to members who died before reaching age 75 will no longer become taxable solely because they were not paid within two years of the pension scheme administrator becoming aware of the member's death. The relevant lump sum and death benefit allowance requirements will still apply.
Introduction of a Pension Tax Allowance: From 6 April 2027, eligible individuals above State Pension age will benefit from an Income Tax reduction. This is intended to protect pensioners with relatively modest total incomes from having to pay small amounts of Income Tax as the State Pension increases. The allowance will be subject to an income-based taper and will initially apply for three tax years.
Greater flexibility when claiming the charitable IHT rate: Where at least 10% of the relevant net estate is left to charity, personal representatives will be able to decide whether notional pension property should be included in the general component of the estate or treated as a separate component when calculating eligibility for the reduced 36% rate of IHT. This should make it easier to secure the reduced rate in appropriate circumstances.
Greater flexibility for prospective personal representatives: From 6 April 2027, individuals who are prospective personal representatives will be able, where certain conditions are met, to direct pension scheme administrators to pay the IHT due on pension benefits directly to HMRC. This should assist with estate administration, particularly where there is no will and the personal representatives have not yet been formally appointed.

Property and savings income

From 6 April 2027, Income Tax rates on property and savings income will increase by two percentage points.

The new rates will be:

• Basic rate: 24% (increased from 20%).
• Higher rate: 44% (increased from 40%).
• Additional rate: 49% (increased from 45%).

The changes will affect individuals receiving rental income or taxable interest on savings, as well as certain trustees and personal representatives.

Importantly, these increases apply specifically to property and savings income. The rates applying to employment income, pension income and dividends will not increase as a result of this measure.

The changes to property income rates apply in England, Wales and Northern Ireland, subject to devolved tax-setting powers, while the changes to savings income rates apply across the UK.

Individuals with significant property portfolios or substantial taxable savings may wish to review their financial arrangements ahead of April 2027.

Cash ISAs

The government has confirmed that the annual Individual Savings Account (ISA) subscription allowance will remain at £20,000.

This means that individuals can continue to save up to £20,000 each tax year in ISAs without paying Income Tax or Capital Gains Tax on the returns.

The government had previously considered reducing the cash ISA allowance, but has decided not to proceed with that proposal. The £20,000 allowance will remain available to individuals of all ages.

Business Asset Disposal Relief

Business owners considering selling or passing on their businesses should take note of changes to Business Asset Disposal Relief (BADR).

From 6 April 2027, the lifetime limit for qualifying gains eligible for BADR will reduce from £1 million to £500,000.

BADR currently allows qualifying business owners to benefit from a reduced Capital Gains Tax rate on qualifying disposals. The reduced lifetime limit means that a greater proportion of gains may fall outside the relief for individuals with substantial business disposal proceeds.

Business owners considering a sale, retirement or succession should review their plans and take appropriate tax advice before proceeding. However, any decision about the timing of a disposal should take account of the wider commercial and personal circumstances, as well as the detailed transitional and anti-forestalling provisions.

Looking ahead: Inheritance Tax and estate planning

Although the Budget did not introduce the wider IHT reforms that some had anticipated, this should not be mistaken for an unchanged tax landscape.

Of particular importance is the previously announced change bringing most unused pension funds and pension death benefits within an individual's estate for IHT purposes from 6 April 2027.

This represents a significant change for individuals who have traditionally viewed their pension arrangements as a way of passing wealth to future generations outside their estate for IHT purposes.

In addition, the IHT nil-rate band remains frozen at £325,000, while the residence nil-rate band remains at £175,000. With property values and other assets potentially increasing over time, more estates may become subject to IHT.

These developments reinforce the importance of reviewing estate planning arrangements, including wills, trusts, pension nominations and lifetime gifting strategies.

How we can help

The Autumn Budget highlights the importance of keeping estate planning and financial arrangements under regular review. Even where there are no immediate changes to an individual's circumstances, forthcoming tax changes may have a significant impact on the value of their estate and the amount ultimately passed to beneficiaries.

We can advise individuals, families, trustees and business owners on the implications of these developments and help them consider whether their existing arrangements remain appropriate.

Disclaimer: This article provides general information based on the Autumn Budget announcements made on 28 October 2026. It does not constitute legal, tax or financial advice. The application of the changes will depend on individual circumstances and the relevant legislation.

If you have any queries about this blog, please contact Laura by email at Laura.McDonagh@allanjanes.com