STEP calls on government to reconsider tax

Ahead of the upcoming Budget, STEP, the professional body representing trust and estate practitioners, is pressing the government to reconsider certain elements of the Finance Bill 2025-2026 that may adversely affect vulnerable groups. STEP highlights that proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) unfairly disadvantage older business owners and farmers, particularly those who lack the capacity for financial planning. As Emma Chamberlain TEP, a spokesperson for STEP, noted, "If you are going to give the £1 million allowance at all, then make it transferable." This new policy, set to be implemented from April 2026, limits inheritance tax (IHT) relief to the first £1 million of business and agricultural assets, imposing a 20% tax on anything above that, which is a significant departure from previous practices.

Furthermore, the suggested taxation on unused pension funds threatens to add complications to estate management during a time of bereavement, potentially placing undue financial pressure on personal representatives (PRs). Chamberlain expressed concerns saying, "STEP, alongside other industry bodies, has serious concerns about how the proposals to charge inheritance tax on pensions are designed." The accountability placed on PRs under the new guidelines could deter potential executors, complicating the administration of estates and leaving bereaved families in financial limbo.

Given these significant proposed changes, STEP urges the government to provide transitional relief for older individuals who might otherwise be unfairly impacted by the new regulations. With upcoming discussions in the House of Lords Finance Bill Sub-Committee, the organisation remains committed to advocating for sensible reforms that address the unique challenges faced by older business owners and bereaved families navigating the complexities of inheritance tax.