Why now could be the moment to review your asset plans before the 2025 Autumn Budget

This has led to people wondering whether to accelerate their succession plans to avoid nasty tax surprises or to wait to see what she has in store for us.

When thinking about succession planning, moving assets around the family is a key consideration, with many taking the view that the taxes payable on doing that today could still be lower than the potential inheritance tax that may be due in future, especially given that there are some valuable reliefs currently available when moving assets around.

Of course, there is the possibility that the Chancellor may decide to abolish some of these reliefs which are currently available in an effort to increase the tax take, but for the moment, they are still available, and worth considering when making plans.

Gift Hold Over Relief

Holdover relief is currently available against CGT arising on gifts of business assets, allowing the tax on the gain to be deferred and to avoid a dry tax charge. Qualifying assets include shares in a trading company (but not a property investment company) and assets used by a trading company. The relief is also available for any transfer of assets for which inheritance tax is payable, for example when there is a chargeable lifetime transfer into a Trust and this is available on any class of asset.

Gifts are (usually) SDLT free

Stamp Duty Land Tax applies to the transfer of land and buildings in England and Northern Ireland (different regimes operate in Wales and Scotland).  Gifts between individuals or into trust do not attract SDLT, except to the extent that the recipient(s) take on the liability to any mortgage on the property (as this is deemed to be consideration).

Potentially Exempt Transfers

Outright gifts by individuals to another individual are (if not covered by one of the other smaller exemptions) Potentially Exempt Transfers which only become chargeable to Inheritance Tax if the donor dies within 7 years, with taper relief applying after 3 years. Please note that gifts into trusts are chargeable if the value of the asset exceeds the donor’s or donors’ unused Nil Rate Band(s).

Other gifting exemptions

There are a number of smaller IHT gifting exemptions, but most of these are too small to be relevant when assets are being moved around.  In some cases, the exemption that allows gifts our of normal income of any amount (provided it does not adversely affect the donor’s standard of living) can be extended when gifting assets, but this is unusual.

Business Property Relief / Agricultural Relief

We know that these reliefs are already earmarked for substantial restriction to cover only the first £1 million of value from April 2026, but the transitional provisions currently in place until then can still make these very important when considering whether to move qualifying assets into trust, and they will still apply in full on the initial settlement, although if the donor does not survive 7 years from the date of transfer, the new rules will need to be used to calculate any additional tax due. Once in the trust, the new tax rates will also apply – a 3% charge on the excess value over £1million on qualifying assets every 10 years – but this still may be preferable to 20% on death.

Valuations

As most transactions of this nature require market values to be reported, please note that we can arrange for our experienced colleagues to value unquoted shares and enter into negotiations with HMRC’s Shares and Assets Valuation Team.

What to do now

If you are already planning a transaction that will rely on one of the reliefs mentioned above, then you may wish to ensure that this is done ahead of the Budget to lock in the current known tax reliefs.

Gravita has the expertise to help you navigate the UK’s complex tax system and our Tax Consultancy Team will be happy to advise you on this and indeed any tax matter. Contact Ian MacGillivray (telephone number 020 7309 3907, email ian.macgillivray@gravita.com ) for a free initial conversation.