Budget 2025 – experts warn private clients to prepare for potential tax changes

By Esther Woolford | Clarke Willmott LLP

Private clients and advisors are being urged to review personal wealth and estate planning strategies as speculation grows over potential tax reforms ahead of next week’s Budget.

Changes could affect inheritance tax (IHT), capital gains tax (CGT), pensions, wealth taxes and non-domicile status, potentially reshaping financial planning for individuals and families across the UK.

Esther Woolford, partner and agriculture sector head at national law firm Clarke Willmott, says that while rumours of IHT threshold increases are welcome, caution is needed.

“Reports that suggested the threshold for IHT could rise from £1 million to £5 million (£10 million for couples) are already being denied by government, despite the pressure that it would ease on estates, including family-owned farms,” she said.

“One example is fifth generation farmer Charlie Rees, from Pembrokeshire, who has been struggling with a cancer diagnosis alongside a desire to protect the farm. Mr. Rees, who was recently featured on the BBC’s Countryfile, says his son Tom could face a £1 million inheritance tax bill, and that he had even considered taking his own life.

“It’s tragic that farmers are considering their own demise as a way to save the farms they have built up during their lives.

“What is certain is that clients should continue to consult advisers and plan for multiple scenarios to protect the next generation.”

Esther Woolford says succession planning should be more than a one-off event. Engaging younger family members early can strengthen responsibility and long-term thinking, but it must be ongoing to ensure businesses can absorb potential new tax burdens.

CGT reforms are under discussion, with the Budget on Wednesday expected to include potential rate increases and changes to reliefs.

“There is speculation that rates could increase and reliefs may be adjusted,” said Michelle Seddon, partner in Clarke Willmott’s private client team.

“Clients with significant assets should review the timing of disposals and whether current reliefs, such as the annual exempt amount, can be utilised effectively.”

Pension planning is another key area under scrutiny.

“The tax-free lump sum from pensions could be capped, with figures around £40,000 being discussed. This could have serious implications for retirement planning, particularly for those relying on flexible pension access.”

Although no formal wealth tax has been confirmed, discussions have continued around levying taxes on net assets above £10 million or introducing annual charges on high-value properties.

“Any such measures could discourage investment in the UK,” warns Michelle Seddon. “Similarly, non-domicile rules may be tightened further, so clients with international connections should monitor developments carefully.”

Michelle Seddon urges proactive planning ahead of the Budget.

“Now is the time to review estate plans, consider pre-budget actions and take expert advice. Even indirect changes could have a significant impact on personal wealth, so staying informed is critical.

“Early action and professional guidance are the best ways to navigate potential reforms and protect long-term financial plans.”

Clarke Willmott LLP is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton. For more information visit www.clarkewillmott.com