Columnist

A budget of shocks and surprises

One of the biggest surprises in the budget was the five per cent stamp duty for additional properties.

The rise has almost doubled costs for landlords, and for many clients it has caused much concern and frustration.

The announcement proved to be a bit of a break from the norm.  

Typically, changes are made with time provided for people to get their house in order, but that hasn’t been the case here. 

Some landlords are deciding to sell parts of their portfolio, but with an already difficult rental market crisis – and a reluctance for further buying – there is concern this may make the situation worse. 

Some landlords will invariably be forced to pass some additional costs to tenants, making the cost-of-living squeeze even tighter. 

There were also some big announcements for estate planning. 

The first one might not come into effect until April 2026, but is set to have a significant impact on business and farming clients with the reliefs from inheritance tax (IHT) being limited to a combined £1 million allowance, which does not appear to be transferable between spouses like the nil rate bands.

In short, anything above that will now be subject to an effective rate of tax of 20 per cent, yet prior to this budget, the entire farming estate may well have passed tax free to family members. 

For example, on figures of a £4 million estate – which would currently pass free of IHT – from April 2026, IHT of around £600,000 will be payable.

This may mean family members are forced to sell land or assets to release the necessary funds. 

Even though there is an option to pay in ten yearly instalments, that’s still a huge £60,000-plus interest per year they need to find, which may not be feasible. 

Another huge impact is the inclusion of unused pensions within the scope of IHT. 

Currently, these would pass free of IHT.

But, from April 2027, they will be included within the inheritance tax regime, with a charge of 40 per cent.

This will be in addition to the income tax that will be owed on the amounts drawn down on a post-75 year death, so is set to have quite a sizable impact. 

Richard Swinbank and Samantha Edward are director and head of residential conveyancing, and director and head of wills, trusts and probate, respectively, at EMG Solicitors

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