After the extremely frosty reception the government received from farmers following their proposed changes to inheritance tax relief for agriculture and business, it has taken a rather circuitous route to arriving at the latest tweaks to the proposed reforms announced just before Christmas. These effectively allow beneficiaries to inherit up to £5 million of assets tax free if a surviving spouse or civil partner can use the deceased’s increased allowance of £2.5 million.
The Renters’ Rights Act 2025 has completely overhauled contracts between landlords and their tenants. Both parties are understandably concerned about how the new tenancy agreements will play out, but while designed to improve security and living conditions for those paying rent, at the same time they create more robust terms for eviction when it is warranted. ‘No fault evictions’ have been removed, but property owners instead have clear steps to remove a tenant if they persistently fail to honour a contract. Our feature in the latest edition of our newsletter explores the first phase of changes that come into force from May, which broadly improve tenants’ rights and also add controls for rent rises. This gives landlords whose properties require improvements a little more breathing space before changes are introduced that will set new standards for safe living environments which will need to be met.
The Autumn Budget also outlined disruptions for two long-established major tax-free saving routes. Individual savings accounts (ISAs) were introduced 26 years ago and have become fully cemented in the public consciousness as the default way for everyone to grow tax-free savings. The only complicating factor was which ISA to choose. The rules were loosened by the previous Conservative government from April 2024 to allow more flexibility for moving funds between ISA providers, but this round of changes has gone further, introducing restrictions for most ISA investors, the under-65s, from April 2027. A cap of £12,000 on cash savings within the overall £20,000 allowance will come in, to encourage greater investment in stocks and shares. The over-65s will retain the full cash allowance.
Another ISA product undergoing reform is the Lifetime ISA (LISA). Introduced after the first Help to Buy ISA and offering a government bonus that could be used either towards a first home or redeemed in retirement. But its terms and conditions have actually prevented many people from using it for its intended house-buying purpose as the price bands for eligible first properties have been too rigid in the face of rising house prices. The LISA is now set to be scrapped, and will be replaced by a new, more flexible version of the Help to Buy ISA.
The other well-known (by all those whose employers offer it) tax-saving option targeted for reform in November was salary sacrifice. Established as a good option for boosting pension contributions with money earned and allocated before it reaches an employee’s current account, the latest reforms will impose a £2,000 annual limit on the value exempt from NICs, which will be in place from April 2029. Many workers rely on salary sacrifice to help manage their income levels below critical thresholds where, for instance, the higher income child benefit charge is introduced, or taxpayers find themselves in the personal allowance tax trap when income tips over £100,000. The new rules will not affect these money-management strategies.
We explore these issues and other stories in our latest Spring newsletter.