The Autumn Budget 2025: What it means for Wills, Estates and Probate

The Autumn Budget 2025 introduces a series of fiscal measures that significantly affect the landscape of wills, estates and probate. While it does not reform core probate procedures, it alters the tax environment in which wills are drafted, estates are administered and wealth is passed between generations. These changes will influence how individuals approach their estate planning and how executors manage inheritance tax.

Key Budget-Driven Changes Affecting Wills and Probate

Pension Funds Brought into the IHT Net (from April 2027)

From April 2027, most unused pension funds and pension death benefits will be treated as part of a deceased person’s estate for inheritance tax purposes. This reverses the longstanding approach under which many defined-contribution pension pots passed to beneficiaries free of inheritance tax.

Executors will now be responsible for reporting these pension assets and paying the tax due. This change is likely to increase the size of many estates, and Wills and estate plans drafted under the previous rules may now create unexpected tax burdens.

Inheritance Tax Thresholds Frozen Until 2031

The Budget confirms that the Nil Rate Band and Residence Nil Rate Band will remain frozen until at least April 2031. As asset values rise, this freeze reduces the real value of tax-free allowances, meaning more estates are expected to become taxable. The freeze increases the importance of early and proactive estate planning, including gifting strategies and the use of trusts.

Cap on Business and Agricultural Property Relief

A new cap of £1 million will apply to Business Property Relief or Agricultural Property Relief. Any value above this cap will receive only 50 per cent relief. This will reduce the IHT benefits for larger family businesses and farms, making it essential to reassess succession plans.

What Has Not Changed but Still Matters

The Budget does not alter the headline inheritance tax rate or the core procedures governing wills, probate or trusts. However, by widening the scope of taxable assets and freezing thresholds, the Budget increases the likelihood of estates falling into the inheritance tax bracket. This raises the overall financial risk within probate and estate planning.

Practical Effects for Will-Writers, Executors, and Families

• Review and Update Wills: Anyone with significant pension wealth or business assets should review their will before April 2027. Many existing plans may create higher tax liabilities. It may be time to change a Will.
• Assess Estate Liquidity: With more assets like pensions and property in the IHT net, estates may be asset-rich but cash-poor, creating pressure to sell assets to cover tax.
• Reconsider Succession Plans: The cap on Business and Agricultural Property Relief makes it essential for business owners and farming families to reassess their estate plans.
• Prepare for Greater Executor Demands: An executor of a Will will need to account for pension assets and manage new tax processes, adding complexity to probate administration.

These changes increase the risk of disputes where beneficiaries were not properly informed, or where executors struggle to manage the newly expanded IHT obligations, potentially leading to contentious will claims.