Post Budget 2024

7-year planning, when to start?

The 2024 Budget has just been announced, coinciding with the launch of my new business focused on guiding families through the complexities of succession planning. With so much anticipation around this Budget, we can now dig into the specifics, allowing lawyers, financial advisers, and accountants to assess its full impact on their clients.

While there has been extensive commentary on the Chancellor’s announcements, I’ve been reflecting on an important aspect that hasn’t changed. For high-net-worth clients able to take a long-term view, this stability may present a strategic opportunity.

Specifically, the inheritance tax rule remains unchanged: gifts made more than seven years before death remain outside the inheritance tax threshold. Despite pre-Budget speculation that the seven-year period might extend to ten years or that lifetime gifting could face new limitations, the existing rule holds.

Wealth transfer planning is a key component for high-net-worth families, and with the 2024 Budget reducing exemptions on business and agricultural property - often integral parts of larger and diversified portfolios - effective succession planning becomes even more critical. Leveraging this seven-year window can help families reduce the IHT burden and, I would argue for many families, achieve better outcomes for everyone.

But of course it’s not always easy. We don’t, thankfully, have a crystal ball which tells us when the 7 year clock is about to start and for families with substantial assets, succession is more than a financial or business handover, there is often a lot of psychology involved.

I’ve worked alongside many families who grapple with complex concerns when considering passing their wealth to the next generation, whether during their lifetime or after their death. There’s often an underlying worry about whether heirs are fully prepared to manage substantial assets responsibly, and how this wealth might influence their drive, personal values, and relationships. For many, preserving the family legacy and preventing conflicts over asset distribution are paramount. Additionally, safeguarding the assets from risks like creditor claims or marital breakdowns is crucial.

For those inheriting significant wealth, the transition often comes with its own set of challenges. Many feel a weight of responsibility to honour their family’s legacy, which can bring pressure to make wise, impactful, or even traditional choices. Navigating sudden financial freedom may lead to uncertainty about career paths, relationships, and personal identity, especially if the inheritance disrupts a previously established lifestyle or self-image. There’s also the potential for strained family dynamics, as expectations and differing views on wealth management come into play. Balancing personal values with the family’s wealth often requires thoughtful support and a clear sense of purpose to ensure both personal fulfilment and respect for the legacy.

My strength is in helping families to understand what their particular issues are, and then work with them and their team of professional advisers to build a plan which guides them now and into the future. I aim to support families have the discussions they need to have, allowing them to build on their strengths and to unblock their obstacles, whether real or perceived. In essence to make sure they are “doing succession well”.

Given reduced exemptions for business and agricultural assets in the 2024 Budget, now is the time for high-net-worth families to prioritize early succession planning and maximise opportunities within the existing seven-year framework. I would be delighted to have a conversation with you, and your other trusted advisers, to see what this strategic planning might look like, and work out how best you and your family can be supported.