How the Autumn Budget Changes Affect UK Lasting Power of Attorney

28th November 2025

What changed in the Autumn Budget?

The Autumn Budget introduced several tax and estate-planning measures that directly affect how people manage their wealth in later life. These changes include:

• Inheritance Tax (IHT) adjustments, including updates to certain reliefs.
• Pension reforms, notably bringing unused pension funds into the IHT regime from April 2027.
• Capital Gains Tax (CGT) changes, such as reductions to key reliefs.
• Wider fiscal measures affecting thresholds, savings and long-term planning.

These shifts mean individuals and families may need to revisit how they structure their estate planning, both during lifetime and after loss of mental capacity.

How do the new IHT rules affect LPAs?

Changes to IHT reliefs and thresholds mean more estates may face future tax exposure. When someone loses mental capacity, their Property & Financial Affairs Attorney may need to manage tax-sensitive decisions on their behalf. These include:

• Continuing gifting strategies
• Selling or restructuring assets
• Managing potential IHT liabilities
• Preserving reliefs for property, business, or agricultural assets

Because attorneys must always act in the donor’s best interests, clearer instructions within the LPA are now more important to avoid disputes, delays, or unintended tax consequences.

What do the pension changes mean for attorneys?

From 2027, unused pension pots may be included within the estate for IHT purposes. This affects attorneys in several ways:

• They may need to decide whether and when to withdraw pension funds.
• Pension drawdown decisions now carry inheritance tax consequences.
• Families may rely more on pension assets to balance lifetime and estate planning.

This means donors should consider adding explicit preferences about pension use directly into their LPA.

How do CGT changes influence attorney decisions?

Reductions in CGT reliefs can alter the timing and desirability of asset disposals. Attorneys may need to:

• Review whether selling assets is still financially beneficial
• Maintain detailed records justifying any transaction
• Seek professional tax advice when decisions carry significant implications

With increased tax sensitivity, attorneys must keep clearer audit trails than ever before.

Do these Budget changes require updating existing LPAs?

Not legally, but practically, yes. LPAs drafted before these reforms may not reflect the donor’s current wishes or tax-aware strategies. Updating or supplementing instructions using a service like Power of Attorney Online can help attorneys act confidently and avoid misinterpretation.

How should donors prepare going forward?

To future-proof their planning, donors should:

• Review their LPA instructions to ensure they address gifting, pensions, and asset management
• Document their long-term tax strategy and store it with the LPA
• Consider appointing a professional as attorney for complex affairs
• Ensure attorneys know when to seek financial or tax advice