As of December 2024, several significant changes and upcoming reforms to Wills and probate law in England and Wales will impact how estates are handled. From inheritance tax adjustments to the modernisation of the probate process, these changes highlight the growing importance of staying informed and updating estate plans. Let’s explore these developments in more detail.
Inheritance Tax (IHT) Reforms
Pensions Included in IHT Calculations (Effective April 2027)
Starting in April 2027, unused pension funds will count as part of an individual’s estate for inheritance tax (IHT) purposes. This major shift, which ends pensions’ exemption from IHT, aims to close a loophole. Individuals with larger estates must plan more carefully to account for this change, potentially increasing IHT liabilities.
Changes to Agricultural and Business Property Reliefs (Effective April 2026)
From April 2026, there will be modifications to agricultural and business property reliefs. Estates will continue to receive 100% relief on the first £1 million of combined agricultural and business property. However, amounts above this threshold will only qualify for 50% relief, resulting in a 20% tax rate on the excess. This change will affect many farmers and business owners, making it crucial to revise estate plans and assess the financial impact.
Freezing of IHT Thresholds (Until April 2030)
The nil-rate band (£325,000) and residence nil-rate band (£175,000) will remain frozen until April 2030. As property values rise, more estates may become liable for IHT in the coming years. While the thresholds remain fixed, many individuals could find themselves unexpectedly subject to IHT. Regularly reviewing estate plans is essential to consider these thresholds in future decisions.
Modernising the Probate Process
Online Applications for Professionals
Since November 2020, all grant of probate applications involving a Will must be submitted online through the MyHMCTS service. This change streamlines the probate process, reduces delays, and improves efficiency. Professionals handling estates must familiarise themselves with the new system to ensure quicker and smoother applications.
Ongoing Reforms and Consultations
The Law Commission has resumed work on Will reform, focusing on modernising Will rules. Proposed changes include recognising the validity of electronic Wills and revising the rule that marriage or civil partnership automatically revokes a Will. A draft Wills Bill is expected by 2025, potentially introducing significant changes to how Wills are created and executed.
Intestacy Rules Update
Surviving Spouse Statutory Legacy Increase
When a person dies without a Will, married with children, the surviving spouse is not entitled to the entire estate. For deaths on or after 26 July 2023, the surviving spouse’s statutory legacy increases from £270,000 to £322,000. The remainder of the estate is divided so that one-half goes to the spouse or civil partner, and the other half is shared equally among the deceased’s children.
When the deceased is not survived by children or other issue, the surviving spouse or civil partner inherits the whole estate under intestacy rules.
A Will is the most important document you can create. It is not advisable to leave your estate to statutory rules, as it almost certainly won’t reflect your intentions.
Why Regular Estate Planning Is Essential
These changes highlight the need for regular estate planning. Inheritance tax, probate, and intestacy laws are evolving, making it vital to stay informed. Whether adjusting plans to account for new IHT liabilities, updating a Will to reflect the latest intestacy rules, or ensuring smooth probate processing through the online system, reviewing estate plans regularly is crucial.
Require Assistance with Wills and Probate Matters?
If you need help with Wills and probate matters, our team is here to assist. Whether you need advice on inheritance tax planning, guidance through the probate process, or support with updating your Will in light of recent changes, we offer expert services to ensure your estate is handled according to your wishes. Contact us today, and our experienced team will be happy to assist with all your Wills and probate needs. Let us guide you through these changes with ease and peace of mind.