Chancellor Rachel Reeves’ first Budget was packed with measures affecting tax and pensions, but how will it affect you and your money?

Claer Barrett, the FT’s consumer editor, joined Sir Steve Webb, former pensions minister and now partner at LCP, Dawn Register, head of tax dispute resolution at BDO, and Majid Hussain, head of private client at Haysmacintyre, to answer queries in a Q&A on Thursday October 31.

The Q&A is now closed, but here are some highlights:

FT reader, upthere: Following the removal of “domicile” from the rules in 2025, will it become common for older British-born people to move to a zero-IHT country such as Australia or Malta?

Majid Hussain: It is clear that individuals, especially non-UK domiciled individuals, will be reviewing their long-term future in the UK. While many overseas jurisdictions offer their own versions of the non-domicile regime, individuals need to consider this carefully, as the new rules also provide for an IHT tail of 10 years.

This means that even if you leave the UK, you remain within the UK IHT net for 10 years. Therefore, in certain circumstances, it is not until you have been non-UK resident for 10 years that you fall outside the scope of UK IHT; even then, your UK assets remain within scope.

FT reader, carado: Were there any changes to stamp duty as part of this Budget? I’ve not seen it reported anywhere.

Dawn Register: The existing higher rates of stamp duty on the purchase of an additional residential property in England or Northern Ireland by an individual will increase from 3 per cent to 5 per cent for transactions with an effective date (normally completion) on or after October 31 2024. This will also apply to the purchase of a residential property by a company that is not liable to the single rate of SDLT [stamp duty].

The single rate of SDLT that applies to the purchase of a residential property for more than ￡500,000 by a company in England or Northern Ireland and which is not intended to be used for certain commercial purposes will increase from 15 per cent to 17 per cent. If contracts are exchanged before October 31 2024 but are completed on or after that date, transitional rules may apply.

In addition to generating more SDLT, the changes are intended to discourage the purchase of second homes and buy-to-let properties and encourage the purchase of family homes. Note that the current higher levels of relief for first-time buyers will go back to their old levels from March 31 2025.

Last orders: Unless you are a 45 per cent taxpayer or have few other assets, is there any reason to leave DC [defined contribution] funds in your estate at death?

Sir Steve Webb: Individuals will want to take personalised financial advice based on their individual situation, but there are a range of factors that they and their advisers may want to consider. First, as your question suggests, taking money out of pensions will incur an income tax bill, so there may not be much point moving money to avoid 40 per cent IHT only to pay 40 per cent or more in income tax. Second, not everyone will have used up all of their nil rate band(s) excluding pensions, so part of your pension may still not be subject to IHT — the government estimates that around 10,000 estates per year will be brought into IHT purely because of the pension.

In this case, part of the pension will be mopped up by the nil rate band, and only the balance subject to IHT. Third, a lot depends on what you would otherwise do with the money if you took it out. There’s not much point from an IHT point of view of taking money out of a pension — where it can be invested for growth free of CGT — and moving it into another investment such as an Individual Savings Account where it would also count as part of your estate.

Fourth, there are still potential income tax advantages on inherited pensions where the person who died is aged under 75. Despite speculation, those rules do not appear to have been changed. There are no doubt many other considerations such as how well invested the money would be if it remained in a pension compared with the alternatives, so it’s not automatically the case that taking money out would be the right thing to do.

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