Private Client
Following the newly released Budget by the Chancellor in November, among several of her new fiscal policies is a series of updates to the Private Client sector. These current and future government implementations are expected to impact clients in this legal practice area through changes ranging from capital gains tax and inheritance tax to Cash ISAs.
Starting off with the capital gains tax (CGT) changes:
- There has been a reduction in relief on qualifying disposals to employee ownership trusts (EOTs) from 100% to 50%
- Incorporation relief will no longer be automated and will need to be actively claimed from April 2026; and
- Anti-avoidance rules for CGT and corporation tax on certain share exchanges and company reconstructions have been tightened following the Budget.
With regard to inheritance tax:
- Relief will be frozen another year, now until 2031. This will apply to the inheritance nil-rate band of £325,000, the resident nil-rate band of £175,000 and the combined £1 million allowance for the 100% rate of agricultural property relief and business property relief.
- The latter £1 million allowance will now be transferable between spouses or civil partners.
- Charges for inheritance tax relevant property trusts will be capped at £5 million for historic trusts settled by former non-domiciled individuals from April 2026.
Other notable changes are:
- Cash ISA allowances are also being lowered from April 2027. For people aged under sixty-five this will reduce from £20,000 to £12,000, with the overall ISA allowance remaining at £20,000.
- The rate of tax on dividend income will increase from 8.75% to 10.75% for basic rate taxpayers and from 33.75% to 35.75% for higher rate taxpayers from 6 April 2026.
- Finally, in terms of new London Stock Exchange listings, the government has agreed there will be a three-year exemption from the 0.5% Stamp Duty Reserve Tax (SDRT) for transfers of securities of companies whose shares are newly listed.
At PWW we have over two hundred years of experience in the private client sector and can offer independent and specialist advice to those looking to navigate not only the latest updates following the Budget but those needing guidance on the wide array of matters relating to private client.
Our Partners; Katrina Jackson and Ian Bowyer who specialise in these matters are highly experienced individuals and keen to help with issues or queries you may have in this area of legal practice.
Residential Property
Amongst the Chancellor’s many new policies, one of the greatest implications of the budget for the housing and property sector is the new mansion tax.
- The Chancellor introduced this high value council tax, which will come into effect in April 2028, for properties over the value of £2 million. This government policy details the plans to apply a four-band council tax surcharge to properties ranging from £2 million to the top band, £5 million.
- These high value properties will be required to pay between £2,500 to £7,500 a year in added tax, equating to roughly £400 million annually according to the Office for Budget Responsibility. Properties will be assessed based on 2026 valuations provided by the government’s Valuations Office Agency. The current council tax system is based on the values of properties in 1991. While council tax bands are not going to change, the government will look at properties in the three highest bands of F, G, and H to see if they are valued above £2m.
The Chancellor also included in her budget restrictions to cash ISA allowances.
- This change will limit people’s annual tax-free savings from £20,000 to £12,000 a year as the government looks to encourage people to invest their money in stocks and shares to help boost growth.
- The government are also looking at plans to phase out the lifetime ISA which will likely impact first time buyers looking to save their earnings towards purchasing their first property.
As aspirational first-time buyers feel the impacts of the new ISA changes, they will likely not be the only homeowners to notice the changes.
With the rise in tax comes a higher financial burden on landlords and in turn, renters.
- The basic, higher, and additional rates on savings UK-wide, and property income in England, Wales and Northern Ireland, will increase by two percentage points (to 22%, 42%, and 47% respectively) from 6 April 2027.
These increases on both landlords and tenants will likely push up prices in the private rental sector as landlords look to offset increased losses and conversely renters find it harder to get onto the first rung of the property ladder.
Commercial Property
The government’s stance on commercial property, particularly high street businesses, in the Budget was one of preserving and supporting the industry. Providing relief for retail, hospitality and leisure (RHL) properties below the rateable value of £500,000 was a main headline for businesses in the Budget.
- The tax rate for small RHL properties will be the lowest since 1990/91, falling by nearly 12p next year.
- The tax rate for all other RHL properties below £500k will be the lowest since 2010/11, representing a 12.5p tax rate cut next year.
- About 750,000 properties will benefit from these discounts.
- This cut in tax will be paid for by levying higher rates on the top one per cent of the most valuable properties e.g. large distribution warehouses used by online retailers, who will pay around £100 million more in 2026/27, with this going directly to lower bills for in-person retail.
Many small and medium sized business (SMEs) owners feel some satisfaction from these drops in rates. However, many larger companies, particularly those with a large online presence or a portfolio of higher rateable value RHL properties are concerned that the increase in rates will financially overburden them at an already tough time for the industry.
The hope is that SMEs in particular will be able to drive an increase in commercial property transactions as either they expand or new players enter the sector with greater ease than in previous years. Conversely, the larger companies may well begin to divest themselves of some of the more valuable properties in their respective portfolios so more offerings to the commercial market in 2026.
For consumers, this may mean a greater variety and choice in SME level RHL businesses, opening the door to more independent retailers and the growth of other SMEs. It may also mean a “shortening of the chain” for some of the larger RHL conglomerates.
PWW has an expanding property department acting in both the residential and commercial property sectors for individuals and organisations in the private, public and charitable sectors. Christopher Perkins, a Next Generation Partner in the Legal 500, heads up the department, benefitting from the excellent wisdom and guidance of recently retired partner, now consultant, Alexa Beale.