The Autumn Budget brought a number of changes that families and their advisers will need to consider when planning for the future.
At Mencap Trust Company, our focus is on what these changes could mean for families planning for the long-term financial security and wellbeing of a loved one with a learning disability.
Some measures have direct implications for tax and estate planning. Others leave important questions around benefits and social care still to be answered. Together, they are a timely reminder that good planning must look beyond today's tax rules and consider what will work for an individual and their family over the long term.
Changes to savings and property income
From April 2027, tax rates on savings income will rise to 24%, 44% and 49%. Property income will also be taxed at these rates in England, Wales and Northern Ireland, following further increases announced in the Budget.
For trusts subject to the trust rate, the tax rate applying to savings and property income will rise to 49% from April 2027. The impact on individual trusts will depend on the type of trust, the income it receives and how the trust fund is invested.
However, tax is only one consideration. Investment decisions and estate planning should always reflect the purpose of the trust, the needs of the beneficiary, appropriate risk and how these needs might change over time.
Inheritance tax and pensions
Families and advisers should also be preparing for an important change announced in 2024 but taking effect from 6 April 2027. From that date, most unused pension funds and pension death benefits will be brought within the value of a person's estate for inheritance tax purposes. Some exclusions apply, including death-in-service benefits payable from registered pension schemes.
This reinforces the importance of viewing an estate as a whole. Families may want to review their arrangements with their professional advisers, including who will inherit different assets, the likely inheritance tax position and how this could affect the provision being made for a family member with a learning disability.
For those who already have plans in place, this is a useful prompt to check that they continue to achieve what was originally intended.
Social care and disability: important questions remain
The Budget points towards further changes affecting disabled people.
The Government is awaiting the final reports of the Timms Review of Personal Independence Payment and Alan Milburn's work on young people and employment. It has said it will respond to the reviews before the end of 2026, with a white paper to follow in early 2027 ahead of planned legislation.
In the meantime, in the Budget the Chancellor set out an ambition for a National Care Service in England, alongside personal care free at the point of use.
The proposals are initially focused on supporting older people in later life. Mencap Trust Company believes it is important that the wider development of social care policy also recognises the needs of working-age adults with a learning disability.
Social care is not solely an issue associated with later life. Many people with a learning disability may need appropriate care and support throughout adulthood, and this can have an important bearing on the long-term financial plans families make.
We will therefore be watching closely as further detail emerges.
Planning beyond the Budget
Budgets naturally focus attention on tax rates, allowances and thresholds. These matter, but families planning for someone with a learning disability are often planning across decades rather than financial years.
If you are planning to pass on inheritance to someone with a learning disability or working with a client wishing to do so, ask yourself these questions:
- Who will be making financial decisions in five, ten or twenty years?
- What happens if parents, siblings or other family members are no longer able to provide the same support?
- Will the arrangements provide sufficient protection and flexibility if the person's needs or family circumstances change?
For some families, a trust may form an important part of the answer, providing a framework through which assets can be managed for the benefit of an individual over the long term.
Tax efficiency matters, but it should not be the only measure of whether an inheritance plan works. Mencap Trust Company believes that protection, flexibility, continuity of decision-making and the needs and wishes of the individual are the most important considerations.
Ultimately, the Autumn Budget provides a useful prompt to revisit existing inheritance arrangements and consider whether they remain fit for purpose. Changes such as the inheritance tax treatment of pensions demonstrate how decisions that seemed appropriate when plans were first made may need to be reconsidered as circumstances and tax rules change.
For families planning to leave an inheritance to a loved one with a learning disability, this means looking beyond tax alone. It means considering how an inheritance can be protected and managed over the long term, how changing needs can be accommodated, and who will take responsibility for financial decisions in the future. For some families, an appropriately structured trust can provide that protection and continuity.
If you are considering how best to provide for someone with a learning disability, Mencap Trust Company can help you and your professional advisers explore the options.