December is a month of reflection, celebration and planning for the year ahead. As the festive season approaches and families come together, many people naturally turn their thoughts to legacy, security and how best to support loved ones in the future. It is also the moment when the full impact of the Autumn Budget becomes clearer, with a raft of new measures set to shape tax planning, gifting decisions and long-term financial arrangements in 2026 and beyond.

This month, we explore the key announcements affecting inheritance, property and later-life finances, alongside recent court decisions that highlight the importance of clear wills, careful planning and joined-up professional advice. Whether you are reviewing your own arrangements or helping family members prepare for the year ahead, understanding these changes now can make all the difference.

A guide to the key announcements in the Autumn Budget 2025

A complex Budget introducing multiple tax rises, freezes and reforms across personal and business taxes. Here are the headline points you need to know:

Inheritance tax (IHT)

• IHT thresholds remain frozen until 2030–31, pulling more estates into the net.

• Unused pension funds and death benefits will fall into the estate for IHT from April 2027.

• APR and BPR £1m allowance uprated from 2031.

• NRB, RNRB and taper thresholds all frozen until 2030–31.

Capital gains tax (CGT)

• BADR and Investors’ Relief rates rising to 18% by 2026.

• Investors’ Relief lifetime limit cut to £1 million.

• CGT relief for disposals to EOTs reduced from 100% to 50%.

ISAs (Cash ISA limit reduction)

• Cash ISA limit reduces to £12,000 from April 2027.

Pension salary sacrifice cap

• From 2029, the NIC exemption on salary-sacrifice pension contributions will be capped at £2,000.

State Pension

• State Pension rises by 4.8%.

You can read more about all of these measures and more in the full Autumn Budget guide on the website of our associated accountancy firm, Mercian Accountants.

Professionals welcome the IHT exemption for ‘secondary transfer’ infected blood compensation

Private client organisations have welcomed the Budget announcement that infected blood compensation will be exempt from IHT in all circumstances. STEP and the Association of Lifetime Lawyers had warned that families were facing unexpected IHT bills where compensation was paid only after the victim’s death, creating a “secondary transfer” charge.

The Chancellor confirmed the exemption now applies across the board. HMRC has also clarified that where a victim has already died, the first living recipient will receive an IHT credit so the compensation can pass tax-free on their own death. Recipients will also have a two-year window to make gifts of the compensation without incurring IHT. The rules apply to payments made before and after 26 November 2025.

More than 30,000 people were infected during the 1970s and 1980s, with many families still awaiting compensation. The change will be legislated for in the Finance Bill 2025–26 with transitional protections for earlier payments.

Rising IHT receipts and growing equity release use highlight the need for joined-up advice

Rising IHT receipts and a growing equity release market underline the importance of coordinated financial and estate planning advice. IHT receipts reached £5.2 billion between April and October 2025, £200 million higher than the same period last year. Equity release lending also increased by 4% year on year.

Frozen thresholds and rising property values mean more estates are being drawn into IHT. The inclusion of unspent pensions in estates from 2027 is expected to bring more families into scope and is already prompting clients to reassess their pension planning.

Advisers warn that further reform remains possible, with some predicting receipts could exceed £9 billion in 2025–26. With more than £3.7 trillion in property wealth held by over-55s, expert advice is increasingly important, particularly when lifetime mortgages are part of intergenerational planning.

Court upholds will after daughter fails to prove undue influence

A Central London County Court ruling has reaffirmed the high bar for claims seeking to overturn a will. The estate of Dervishe Halil, worth around £1.1 million, was left entirely to her eldest son Dogan, under a 2018 will, accompanied by a handwritten side letter explaining why her younger children had been excluded.

Her daughter Aysel alleged Dogan had manipulated their mother and that she did not fully understand she was disinheriting two of her children. The judge rejected the claim, finding Dervishe had acted deliberately, attended her solicitor alone, and remained mentally sharp in 2018.

The judgment highlights two key principles: testamentary freedom remains central, and undue influence requires proof of actual coercion, not family disagreement or persuasion.

High Court confirms deed was valid despite attempt to rescind

The High Court has confirmed that a Deed of Variation was validly delivered and could not be revoked after a family dispute. The case involved a Fulham property worth £1.765 million. Marie Gauchenot had gifted her one-third share to her nephew via a deed sent by email labelled “Executed Deed of Variation.” She later attempted to withdraw the deed, alleging misrepresentation.

The court found the deed had been validly delivered because Marie clearly intended to be bound, particularly as she knew it would be used for mortgage arrangements. Her attempt to revoke it was treated as evidence of its binding effect. Claims of mistake also failed, with the court finding no basis for a promise of a lifelong occupation. A late attempt to argue conditional delivery was dismissed.

The deed was declared valid and binding, and the counterclaim failed.

Equity release loans rise as older homeowners support families and manage rising costs

Equity release lending reached £639 million in Q3 2025. Fewer plans were taken out, but the average amounts released were higher. Homeowners continue to use housing wealth to manage living costs, support relatives, and plan for later life.

Advisers note clients had been waiting for interest rate stability before proceeding. Average loan sizes rose across both new plans and further advances, and although lump sum borrowing increased slightly, drawdown continues to dominate long-term planning.

Housing wealth is now a significant part of retirement and intergenerational planning. Good advice remains essential as clients weigh flexibility, interest costs and family support needs.

Judge allows sister to remain in family home but stops short of granting a life interest

A High Court judge has ruled that a woman who cared for her late mother can remain in the family home for a further 14 years, after which it must be sold. Siblings Maria and Philip Chryssikos jointly inherited the £1.2 million property. Maria remained in the home while caring for their mother and argued that there had been an understanding that she could stay for life.

Philip disputed any intention for lifelong occupation. The judge accepted Maria’s significant role in her mother’s care and relied on a 2016 letter confirming the mother wished Maria not to be evicted. However, the judge found no basis for lifelong occupation. Maria was granted a licence to stay until she no longer needs the property or until her 70th birthday, whichever is earlier.

Christmas Office Closure

Please be aware that our offices will close for two weeks from 22 December for the Christmas period, with our final working day being 19 December. We will return to work on 5 January. If you require assistance before the holiday period, please get in touch with us in advance so we can ensure your enquiry is handled before the office closes.

Ending the Year with Clarity and Confidence

As the year draws to a close and we look toward a fresh start in January, now is an ideal moment to review your plans, update your wishes and ensure your affairs remain aligned with your goals. The Autumn Budget has introduced meaningful changes across tax, pensions and property, and with further reform still possible in 2026, early preparation can provide clarity and peace of mind.

The festive season is a time for family, generosity and reflection. It is also a reminder that thoughtful planning is one of the most valuable gifts we can leave for those we care about. If you would like guidance on any of the issues raised in this month’s newsletter, or support in reviewing your estate plans for the year ahead, the team at Clarke and Wright is here to help you start the new year with confidence.

N.B. This document is for information only and does not constitute legal or tax advice.