2025 in review: Probate and tax changes affecting estate administration

Throughout 2025, there were several legal and tax developments that will impact the Wills and probate sector over the coming years. Many of last year’s headline announcements have started to move closer to reality, and new rule changes are adding extra layers of complexity for Personal Representatives (PRs) and professionals.

In this round-up, we summarise some of the key changes and ongoing discussions that could impact you and your clients in 2026 and beyond.

Long-term residence test for Inheritance Tax

Although it may not arise in daily practice, the new long-term residence test for UK Inheritance Tax (IHT), effective from 6 April 2025, is a crucial consideration that should not be overlooked.

Previously, domicile was the primary factor in deciding whether someone’s worldwide assets were within the UK IHT net. The new rules introduce a residence-based test alongside domicile:

• If an individual has been a UK resident for at least 10 out of the last 20 tax years, their worldwide assets may be brought into scope for IHT.
• There is significant technical detail behind this test, and the HMRC Inheritance Tax Manual provides useful guidance on the finer points.

What this means for professionals

Make sure your fact-finding includes clear questions about domicile and residence history.

• Whether one Will is covering all assets, or
• Separate Wills in each jurisdiction, and whether one might revoke the other.
• If you identify cross-border elements or potential non-domiciled cases, consider seeking specialist advice early.

Kings Court Trust’s advice line is available to discuss high-level points while you are with clients, helping you spot potential issues and next steps.

Amendments to the Non-Contentious Probate Rules

From 3 November 2025, the Non-Contentious Probate (Amendment) Rules 2025 came into force, modernising several aspects of the probate process.  

Key updates include:

Priority in intestacy cases

Where more than one person is equally entitled to apply for Letters of Administration (for example, multiple adult children in an intestate estate), a district Judge or Registrar can now decide who should take priority.

• Previously, it was effectively a “race” to the Probate Registry, with the first correct application winning.
• Going forward, if competing applications are made, the Court can take a view on who is best placed to act, for example, the person most involved in care or practical arrangements.

Online applications by Trust corporations

Trust corporations will now only be able to apply for a Grant of Probate via the online portal.

• This is expected to support quicker processing where professionals are involved.
• Kings Court Trust has been using the online system for many years, so this change aligns with our existing practice and experience.

Revised caveat process

A Grant may now be revoked if a caveat is later found to have been lodged before the Grant was issued.  

• In practice, we will need to see how often this arises.
• The change aims to strengthen the protection available in contentious or potentially contentious estates.

Sharp increase in the cost of Grant copies

Alongside the rule changes, 2025 also brought a significant rise in the cost of official copies of Grants of Probate.  

• The fee per official copy has increased from £1.50 to £16.
• This is a 967% increase, and can add a meaningful cost to estate administration when several copies are required.

For example:

• Application fee for a Grant of Probate: £300
• Five official copies at £16 each: £80
• Total cost: £380

For families applying without professional support, these fees must be funded up front.

For professionals, it will be important to review your standard assumptions about how many original sealed copies are ordered and to build these costs into any quote or estimate.

Budget updates: Frozen thresholds and “stealth” changes

Although the Autumn 2025 Budget did not introduce many new headline measures, it reinforced and built upon the significant reforms announced in 2024.

Key takeaways include:

• Nil-Rate Band (NRB) and Residential Nil-Rate Band (RNRB) remain frozen, currently until 2030 for the NRB, with freezes also continuing for RNRB.
• Income Tax and National Insurance thresholds remain frozen until at least 2028–29, increasing the impact of “fiscal drag”.  
• From April 2027, tax rates on dividend income, savings interest, and certain property income will increase, effectively adding 2% in many cases for basic-rate taxpayers, raising the overall tax burden on estates with investment income.

For estate administration, this means:

• More estates are likely to fall into the taxable category over time as values rise, but thresholds do not.
• PRs must be alert not only to IHT but also to Income Tax and Capital Gains Tax during the period of administration, often spanning more than one tax year.

Business Property Relief, Agricultural Property Relief, and Trust changes from April 2026

Following the 2024 Autumn Statement, draft legislation published in 2025 has clarified how the reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR) are expected to operate from 6 April 2026.  

Key points include:

• A new £1 million allowance will apply to the combined value of assets qualifying for 100% BPR or APR in an estate.
• Any value above £1 million will attract relief at 50%, meaning the effective IHT rate on that amount will be 20% instead of 40%.
• The £1 million allowance will also apply to qualifying agricultural and business assets held in certain Trusts.
• AIM-listed shares and some foreign-listed shares will see their relief reduced from 100% to 50%, significantly altering the tax profile of certain investment strategies.
• The option to pay certain IHT liabilities by ten annual instalments will be extended to more types of BPR and APR-qualifying property.

Government examples suggest that, in theory, some couples could still pass on up to £3 million free of IHT when combining NRB, RNRB, and the new relief allowance. In practice, the interaction of thresholds, tapering, and eligibility criteria means very few families will reach this figure.  

What this means for planning

• Landowners, business owners, and clients with AIM portfolios should review existing arrangements well before April 2026.
• Will Writers and Financial Advisers will need to work together to check that planned reliefs still achieve the desired outcomes under the new rules.
• Personal Representatives dealing with deaths from April 2026 onwards will have to navigate a much more complex BPR/APR framework on the IHT400 and related schedules.
  

Pensions and Inheritance Tax from April 2027

From 6 April 2027, unused pension funds are expected to be brought more firmly into the Inheritance Tax net, with draft legislation setting out how this may work in practice.  

Headline points include

Personal Representatives (PRs) will be responsible for:

• Obtaining valuations of unused pension funds.
• Reporting these to HMRC.
• Ensuring the correct IHT is paid.
• Pension scheme Administrators will need to cooperate and may be required to pay IHT to HMRC within short timeframes, although the practicalities are still being refined.
• PRs will be able to direct pension providers to retain up to 50% of the pot for 15 months, giving time to complete the IHT400 and any corrective accounts.
• Where HMRC has given formal clearance and a previously unknown pension later comes to light, current proposals indicate that PRs may be protected from further pension-related IHT liability.

Not all pensions will be caught. Certain dependants’ pensions and death-in-service schemes are expected to remain outside the new rules, but the overall direction is clear: pensions will no longer be entirely separate from IHT planning.

For lay Executors, this represents a major increase in administrative workload and personal liability. Even today, many families are surprised to learn that Income Tax and Capital Gains Tax can arise after death. Adding pensions to the IHT calculation will make professional support even more valuable.

Will writing reform on the horizon

Alongside the tax and probate changes, 2025 also saw renewed attention on Wills law reform, with a detailed report examining possible updates to the Wills Act and related rules. While nothing has yet been finalised, early proposals include changes to:

• Formalities for valid Wills.
• How certain modern signing or witnessing methods may be treated.
• The way some long-standing technical rules operate in practice.

The current Wills framework is still in force, but the direction of travel suggests that Will Writers and other professionals may need to adapt their practices once any reforms are implemented, potentially from 2026 onwards.

Kings Court Trust will continue to monitor developments and will share updates and training through future blogs and webinars.

Kings Court Trust: Supporting you and your clients

These changes illustrate that probate and estate administration are becoming increasingly complex, rather than simpler. From new residence tests and reform of business reliefs to pensions entering the IHT net, Personal Representatives face growing responsibilities and potential personal risk if something is missed.

Kings Court Trust is here to help:

• We offer fixed-fee probate and estate administration solutions, so families know the cost from the outset.
• Our team of specialist tax and legal experts stays up to date with all legislative changes, so you don’t have to.
• We provide a personalised service for every estate, from simple Grants to complex multi-jurisdictional cases.
• Partners can call our advice line for impartial guidance while they are with clients, helping to identify risk areas and the right level of support.

Looking ahead to 2026

2025 has been a year of consolidation and preparation, with many of the most important reforms scheduled to take effect in 2026 and 2027. Now is the ideal time for professionals to:

• Review existing client Wills and estate plans.
• Update fact-finds to capture domicile, overseas assets, pensions, and business interests.
• Consider when to involve a specialist probate provider to protect clients and reduce risk.

We look forward to working with you in 2026 to support your clients with expert, fixed-fee probate and estate administration services.

From everyone at Kings Court Trust, we wish you a peaceful festive season and a happy New Year.