Autumn Budget: “Protecting family wealth is not simply about reducing the tax bill”

While the Autumn Budget did not bring significant new changes for wealth planning, the previously announced pension inheritance tax changes due in April 2027 remain an important reason for families to review their plans. From intergenerational gifting to divorce settlements, specialist advice can help families protect their wealth and long-term financial security.

Catriona Attride, partner in the private client team, and David Hickmott, principal associate in the family team at leading UK law firm Mills & Reeve, share their insights on managing tax uncertainty, safeguarding family assets and planning for future generations.

• The wider tax picture: Ongoing tax pressures highlight the need for families and business owners to plan ahead
• Protecting wealth across generations: Following a period of a changing tax landscape and ahead of the April 2027 inheritance tax changes to pensions, families should review pensions, gifting and succession plans
• Gifting and safeguarding assets: Parents should consider how gifts and asset transfers could affect family wealth, particularly if relationships break down
• Financial security through divorce: Settlements should account for future income, tax liabilities, retirement needs and business interests
• The value of specialist advice: Early legal and tax advice can help families make informed decisions and protect long-term financial security

Understanding the impact of tax changes on family wealth

David Hickmott said: “The run-up to this year’s Autumn Budget highlights the importance of considering how tax rules affect asset values and long-term financial planning. This is particularly relevant in divorce proceedings, where the tax treatment of pensions can influence how assets are divided.

“While the Budget will not change the courts’ underlying approach to fairness and financial needs, looking beyond headline figures is essential for reaching an appropriate settlement.”

Catriona Attride added: “The last few Budgets have highlighted the cumulative pressure on business owners and wealthy families from inheritance tax relief changes, employer National Insurance contributions, rising minimum wages and business rates. While no further changes were announced in these areas in the Autumn Budget, continued uncertainty can affect confidence and the UK’s attractiveness to wealthy individuals.

“Our recent survey of 2,000 UK adults found that 47% had considered leaving the UK to live abroad long-term or permanently, highlighting the importance of greater certainty.”

Planning for pension inheritance tax changes

Catriona said: “From April 2027, most unused pension funds and pension death benefits will fall within the value of a deceased person’s estate for inheritance tax purposes. Families should review their pension and succession plans, rather than assume that leaving savings untouched will be the most tax-efficient option.

“Drawing pension income, taking an available tax-free lump sum or making lifetime gifts may be appropriate in some circumstances, but none of them will automatically be the most tax-efficient choice. Families should weigh potential tax savings against their future income needs and overall financial security. Regular gifts from surplus income may also qualify for an inheritance tax exemption without the usual seven-year survival requirement, provided the relevant conditions are met.”

David added: “For divorcing couples, these changes add another consideration when assessing pensions alongside other assets in a financial settlement. Whether to retain a pension or offset its value against property or other assets will depend on individual circumstances, including future income needs, retirement plans and potential tax liabilities.”

Gifting wealth to children and protecting family assets

David said: “Parents helping adult children with a property purchase should consider how their contribution would be treated if the relationship breaks down. A declaration of trust can record how ownership is divided when buyers contribute different amounts towards the purchase. Parents should also clarify whether their contribution is a gift or a loan, as this will affect whether they can seek repayment. If they confirm to a mortgage lender that the money is a gift, it may be difficult to argue later that it should be repaid.

“Trusts and prenuptial agreements may help protect family wealth, although some partners may be reluctant to sign a prenup as a condition of receiving financial support. During divorce, trusts or arrangements to fund children’s education may also offer ways to provide for children while preserving assets.”

Catriona added: “Gifting wealth can support succession planning, but families should consider the tax implications and their own financial security before transferring money or business assets. Trusts and family investment companies may offer ways to structure wealth for future generations. Taking advice beforehand can help families avoid unintended consequences and ensure transfers reflect their wishes.”

Balancing immediate needs with long-term financial security

Catriona said: “Families should approach the April 2027 changes as part of a wider review of their financial arrangements, weighing potential tax savings against the need for reliable income and financial security. Protecting family wealth is not simply about reducing the tax bill but making informed decisions that support current needs and preserve wealth for future generations.”

David added: “In divorce, these trade-offs can be particularly significant when deciding how to divide property and pensions. Retaining the family home in exchange for a smaller pension share may provide short-term stability, particularly where children are involved, but could leave one party financially exposed in retirement. This can disproportionately affect women, making it important to consider future income and retirement needs alongside immediate housing requirements.”

Taking advice before making financial decisions

David said: “Anyone going through divorce should ensure asset valuations are up to date and seek legal and tax advice before agreeing a settlement. Proceedings can be lengthy, and changes in asset values or tax rules can affect the outcome. Once a settlement has been reached, a subsequent tax change will not necessarily provide grounds to revisit it.”

Catriona added: “As more people turn to AI tools to understand tax changes and explore their financial options, it is important to recognise their limitations. AI can provide a useful starting point, but it cannot replace advice tailored to a family’s individual financial position, objectives and long-term needs. Specialist advice can help families interpret the rules in the context of their own circumstances and make informed decisions about the future.”