The UK government is reportedly considering introducing further reforms to the UK’s inheritance tax (IHT) regime to raise more money at the Autumn Budget.
Options being discussed include tightening rules that allow people to give away assets before they die, such as a lifetime cap on money that can be gifted, or changing the rate at which IHT liability tapers in the seven years between a gift and death, according to The Guardian.
The Labour government has already legislated to bring pensions into people’s estates for IHT purposes from 2027, as well as reduce business relief and agricultural relief to only apply to the first £1m of assets from 2026. However, money and assets can still be gifted before death. Gifts made seven years before someone dies are not currently subject to IHT.
Stephen Atkinson, global head of sales at Utmost Wealth Solutions, has warned that further changes to the IHT regime, such as targeting gifting rules, could risk making the UK “increasingly less attractive” from a wealth perspective.
“IHT is already expected to paid on nearly 1 in 10 deaths by the end of this decade as reforms announced at last year’s Budget tightened longstanding reforms,” he said. “The tax has raised record sums for the past four years as more estates are pulled into the net and face higher liabilities.
“Ultimately, while the chancellor is clearly keen to explore all available revenue-raising options, these reforms and continued uncertainty over the future direction of travel are making the UK increasingly less attractive from a wealth perspective.”
Atkinson added that the UK has already lost “many high-net-worths and non-doms” in the past year and any further measures that make the UK less competitive as a destination for affluent families “would likely accelerate this impact”.
“At the same time, we have experienced strong and growing demand for financial advice with families seeking estate planning strategies to protect intergenerational wealth and avoid unintended tax consequences,” he added.
