‘UK’s most hated tax’ could be increased this month as experts issue warning | Personal Finance | Finance
A warning has been issued over the UK’s ‘most hated tax’ with fears that rules could be changed again this November when Rachel Reeves unveils her latest Autumn Budget.
Inheritance Tax is something most people probably don’t want to think about but at the same time, is a tax a lot of people spend time and effort trying to avoid paying.
And according to financial experts at investment platform Hargreaves Lansdown, financial advisers are seeing a ‘surge’ in Inheritance Tax planning requests fuelled by speculation over further changes looming from government coupled with announcements already in place which are set to change the rules from 2027.
Adam Kemp, Chartered Financial Planner at Hargreaves Lansdown, said: “Inheritance tax (IHT), long dubbed the UK’s most hated tax, is making headlines again. In just the first half of this tax year alone, it added £4.4bn to the Treasury piggy bank – £100mn more than in the same period last year.”
He added: “The latest whispers suggest that the Chancellor could be eyeing the gifting rules to help plug the large hole in the public finances.
“But inheritance tax planning isn’t just about numbers. It’s about looking after your family, securing peace of mind, and the legacy you hope to leave behind. Taking steps now could help protect your wealth and deliver meaningful savings for loved ones.”
Reme Holland, financial planning partner at accountancy firm Albert Goodman, identified two key ways which Inheritance Tax rules could be changed.
Currently, you can give gifts to people at least seven years before you die, with no limit on the value, to avoid Inheritance Tax charges.
For example, if you gifted a house to your son, and then lived another 8 years, there would be no Inheritance Tax to pay on the property when you die. If you died within seven years of the gift, the amount of tax is tapered on a scale depending on how long ago the gift was given.
“One of the things the government has mooted over the summer is putting a cap on how much can be gifted, and that cap could be somewhere between £100,000 and £200,000,” says Holland.
The second change the Government has talked about is removing the taper.
“So if you died at any point during those seven years, the full 40% IHT would be chargeable on the value of that gift,” notes Holland.
Hargreaves Lansdown’s Mr Kemp explains that the best way to prepare is to use a dedicated adviser.
He added: “If your goal is to pass on as much of your wealth as possible to the people you care about, financial advice can help you navigate the complexities of IHT, whilst providing a clear, impartial perspective during what can often be an emotional process.
“An adviser can help by making sure you’re using available exemptions and allowances, creating trusts, timing your gifts, and more. As well as help ensure that any changes still align with long-term financial security.”
