The dust has begun to settle from the first Labour party budget for over a decade. It has caused lots of discussions particularly the changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT) that will likely influence business and property disposals, estate planning, wealth transfer, and financial protection for families across the UK.
With new tax treatments impacting business property and agricultural reliefs for IHT and CGT and a pathway for including pensions in estates for IHT purposes, these changes could reshape how families plan their legacies and how these will be addressed if a relationship breaks down.
At The Family Law Company, we understand the complexities that these new policies bring and how they may influence decisions on family wealth transfers and disposals, particularly in light of personal circumstances such as marriage and divorce.
Divorce and finances
Under the laws of England and Wales, the court considers all assets a couple holds—whether earned or inherited—when dividing finances in a divorce. Assets from inheritances or family gifts may be “ringfenced” depending upon their nature, when it was received and how the asset was used by the couple only if they exceed the couple’s reasonable needs and have not been intermingled with joint assets.
There have been several recent cases where ring fencing assets and division of acquired wealth have been considered by the Courts. However, predicting how these factors might apply in any given situation is challenging, especially when a divorce or separation is not anticipated at the time of transfer. With divorce rates still above 40% in the UK, it’s wise to consider protective measures where possible.
Preparing for the future with a prenuptial agreement
To safeguard family wealth, especially when taking advantage of the seven-year IHT rule, many families may consider prenuptial or postnuptial agreements. These agreements, when created thoughtfully and with the correct legal safeguards, carry significant weight in protecting assets transferred as part of family legacies.
Families and couples should view nuptial agreements as part of their estate planning. While these agreements cannot entirely prevent a claim against transferred assets in divorce, they offer a layer of protection that can help preserve family wealth over time.
The Family Law Company’s Support
With the Autumn Budget’s changes set to come into effect in April 2026, now is an ideal time for families to review and update their estate planning strategies. At The Family Law Company, we offer specialist guidance to couples who are separating to understand the implications for family wealth and for families who want to take proactive steps to protect their assets and legacies.
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