Autumn Budget 2026: What It Means for Inheritance Tax and Estate Planning

The Autumn Budget 2026 includes several measures that may affect how families plan around trusts and pensions. This guide also summarizes previously announced 2027/28 savings and property income rates and the age-based cash ISA limits taking effect from 6 April 2027.

This guide separates direct IHT changes from wider tax measures that could affect an estate plan. At publication on 28 October 2026, the Government’s Budget tax overview said the trust-liability and pension two-year-rule measures would be introduced in Finance Bill 2026-27; their announced effective dates do not mean they were already enacted. The separate pension IHT reform from April 2027 was already legislated in Finance Act 2026. The savings/property rates and cash ISA limits below were announced earlier and are based on current HMRC guidance, not new Autumn Budget 2026 measures.

What changed for Inheritance Tax?

The Budget’s most direct IHT measure concerns liabilities connected with property held in trust. It does not abolish IHT or change the standard nil-rate band.

Liabilities and trust property

The Government says it will legislate in Finance Bill 2026-27 to set out how liabilities properly incurred by trustees are taken into account when valuing settled property for IHT, aligning their treatment with personal liabilities. The Bill will also extend debt-deduction restrictions and anti-avoidance rules so certain liabilities funded with value originating from a beneficiary’s own estate cannot reduce IHT charges.

The announced effective date is 28 October 2026 for deaths and other chargeable events on or after that date. The Budget tax overview describes this as a measure for Finance Bill 2026-27, not as an already-enacted change. The detailed rules matter: this is not a blanket rule that every trust debt is ignored, nor does it mean that every trust will automatically pay more tax.

If a trust owns property and has loans, debts or other liabilities, trustees and families should check how those arrangements are documented and funded. Do not restructure a trust or transfer assets based on a headline summary alone. Read our guide to trusts and Inheritance Tax and seek specialist advice where appropriate.

Pension death benefits: the two-year rule

The Government says it will legislate in Finance Bill 2026-27 to remove the two-year rule under which some otherwise tax-free pension and lump-sum death benefits can become taxable if paid more than two years after the scheme administrator first knew, or could reasonably have been expected to know, of the member’s death.

The announced change applies to payments made on or after 28 October 2026, regardless of when the member died. It covers benefits that would otherwise be taxable as the recipient’s pension income or subject to the special lump-sum death-benefits charge. A benefit would no longer become taxable solely because it was paid after the two-year period; other tax rules and allowances can still apply.

Pension arrangements differ. Check the scheme’s rules and nominations, and make sure your personal representatives know which providers to contact. Our article on what happens to pensions when someone dies explains the wider April 2027 change.

Higher tax rates for savings and property income

From 6 April 2027, HMRC’s published 2027/28 rates for savings income are 22%, 42% and 47% at the basic, higher and additional rates. The same rates are set for property income in England, Wales and Northern Ireland. HMRC says the Scottish and Welsh governments are to be given the ability to set property income rates under their existing Income Tax powers, subject to commencement following engagement; check current devolved guidance rather than assume separate rates have taken effect. Savings income rates apply across the UK, and Scottish taxpayers pay the same rates on savings interest as the rest of the UK.

These are the published 2027/28 rates, not rates applying before 6 April 2027. They were announced at Budget 2025. For savings income, the current 2026/27 rates are 20%, 40% and 45% before any applicable allowances.

The amount of tax actually due depends on your taxable income, allowances and the type of account or investment. Qualifying ISA income remains tax-free. Landlords should consider rental profit and cash flow, but should not sell or transfer property based only on the new rates: Capital Gains Tax, IHT, ownership and other rules may also matter.

Cash ISA limits will depend on age

From 6 April 2027, the annual cash ISA subscription limit is £12,000 for people under 65 and £20,000 for people aged 65 or over. The £20,000 overall ISA limit remains. HMRC says entitlement to the higher cash limit starts at the beginning of the tax year in which a person turns 65. These are the published age-based rules, not a £20,000 cash ISA limit for every adult.

HMRC’s 2026 guidance also describes related anti-circumvention rules, including restrictions on transfers into cash ISAs and a 22% charge on interest from cash held in non-cash ISAs. Check the current ISA rules before subscribing or transferring.

An ISA can shelter qualifying interest or investment returns from Income Tax and Capital Gains Tax, subject to the rules and annual subscription limit. That does not automatically make the ISA value exempt from IHT: estate tax treatment is a separate question. Read our guide to current IHT allowances for more on how savings fit into an estate.

IHT thresholds remain important

For the 2026/27 tax year, the standard nil-rate band is £325,000. A qualifying home left to direct descendants may also benefit from a residence nil-rate band of up to £175,000, subject to eligibility and taper rules. Unused bands may be transferable between spouses or civil partners under the relevant rules.

The maximum combined amount is therefore not automatic. The residence band can be restricted or unavailable, and it tapers for estates above £2 million. The Budget’s trust measure does not change these headline thresholds.

Estate values can change as property, savings and investments rise or fall. Start with a current inventory of assets, debts, gifts and ownership arrangements. You can use the free UK inheritance tax calculator for an initial estimate; complex trusts, lifetime gifts and reliefs need separate consideration.

What families and landlords can do now

1. Review trust liabilities. Keep clear records of why a liability was incurred, who funded it and which trust assets it relates to.
2. Check pension nominations. Confirm that death-benefit nominations are current and that your family knows how to contact each pension provider.
3. Model rental and savings income. Estimate the effect of the 2027/28 rates using your expected taxable income, not just gross rent or interest.
4. Review ISA plans. From April 2027, the cash ISA limit is £12,000 if you are under 65 and £20,000 from age 65; check current subscription rules and eligibility before contributing.
5. Update your estate picture. Revalue major assets, record debts and gifts, and check whether your will and wider plan still reflect your wishes.

Before changing a trust, pension arrangement or property ownership, get advice from a suitably qualified professional who can consider the full facts.

Frequently asked questions

Did the Autumn Budget 2026 abolish Inheritance Tax?

No. The Budget announced a targeted trust-liability measure for Finance Bill 2026-27. The standard IHT framework and current thresholds remain relevant.

Does the pension two-year rule change mean pensions are outside IHT?

No. The two-year rule concerns the timing and Income Tax treatment of certain death-benefit payments. Finance Act 2026 has already legislated to bring most unused pension funds and pension death benefits within IHT from 6 April 2027, subject to exclusions.

What are the published 2027/28 savings and property income rates?

HMRC publishes rates of 22%, 42% and 47% from 6 April 2027. Savings rates apply UK-wide; the published property rates apply in England, Wales and Northern Ireland, with devolved arrangements subject to commencement. Check current HMRC guidance for your circumstances.

Is the cash ISA allowance still £20,000?

From 6 April 2027, the cash ISA limit is £12,000 for people under 65 and £20,000 for those aged 65 or over; the overall ISA limit remains £20,000. ISA tax treatment does not itself make the account exempt from IHT.

What are the current IHT thresholds?

For 2026/27, the standard nil-rate band is £325,000 and the residence nil-rate band may add up to £175,000 if the conditions are met. Check the current HMRC thresholds and your own eligibility.

Sources and further reading

• HMRC: Budget 2026 tax overview — announced Finance Bill measures and effective dates
• HMRC: Finance Bill 2026-27 — draft legislation and tax documents
• Finance Act 2026, section 67 — enacted pension IHT provisions
• HMRC: Inheritance Tax on pensions technical note
• HMRC: Changes to tax rates for property, savings and dividend income
• HMRC: Inheritance Tax thresholds and interest rates
• HMRC: Cash ISA limit reduction announced in 2025
• HMRC: 2027 ISA reform and anti-circumvention rules
• GOV.UK: Income Tax in Scotland, including savings interest
• Inheritance Tax and pensions: what happens when you die?
• Trusts and Inheritance Tax in the UK