Now that 2025 has begun, many people will have been thinking about New Year’s resolutions. Most are, quite rightly, keen to prioritise health and fitness but it is equally important to think about the future and protecting family members from foreseeable risks. Making a Will is an easy resolution to fulfil.
A poll by Will Aid in November 2024 highlighted that 56% of adults in the UK do not have a Will at all and a further 11% have an out-of-date Will. As the laws relating to Inheritance Tax have changed over the years, even if you do have a valid Will in place the provisions within it may no longer be appropriate for your current personal circumstances, or they may simply no longer serve the purpose that they once did.
Preparing a Will is one of the most valuable steps you can take to ensure that your assets will be dealt with in line with your wishes after your death, as well as protecting and providing for your family and loved ones. Many believe that their estate will automatically fall to their closest family members when they die but this is not always the case. Under the laws of Scottish intestacy (i.e. when someone dies without a Will), a spouse or civil partner is not always entitled to receive all of the assets of their deceased spouse or civil partner, and the situation for cohabiting couples on death can be even more complex, with the surviving partner potentially having to raise a court action at what is already a stressful time.
Inheritance Tax Changes
The October 2024 Budget made it even more important to consider taking advice on Inheritance Tax (IHT) and making a Will forms part of planning for the tax.
As IHT allowances have stagnated in recent years, HMRC has reported that more and more estates are paying tax on gifts made by the deceased during their lifetime, the tax take more than doubling between 2011 and 2021. Timing is crucial with IHT planning and while it’s never too late to take advice, it’s also better to do so at an early stage when individuals are able to implement plans properly.
The impact of IHT changes on business owners, farmers and those paying into pensions has been well documented, with the Government announcing its intention to cap full Business and Agricultural Property Reliefs (APR and BPR) at £1m from April 2026. Individuals investing in the Alternative Investment Markets (AIM) which previously benefitted from 100% relief after two years are also due to face an effective 20% tax charge on these holdings, if the proposals are implemented into law. That is of course still better than the standard 40%.
In addition to the cap on APR and BPR, the Budget also had an impact on pension savers, as the proposal is that from April 2027 most unused pension funds and death benefits will be included in value of a person’s estate for IHT purposes. Previously, such funds sat out-with a person’s taxable estate.
Having an up to date Will can be a useful tool in mitigating IHT exposure, as your Solicitor will be able to advise on the best and most tax efficient ways to pass assets on to your loved ones, ensuring that your wishes are set out accurately and that any succession/IHT planning goals can still be achieved. While 2026 and 2027 may seem some time away yet, in some ways it only feels like yesterday since we were considering resolutions for 2024, so make 2025 the year you look after your whole self and your loved ones.
Our Private Client team are on hand to advise and assist you in preparing or updating your Will today, contact us on 03330 430150 to arrange an appointment.
