Published On: 12 October 2023

Inheritance tax has been a topic of debate for years, with recent rumours suggesting the government might consider reducing or even scrapping it entirely. Rishi Sunak is reportedly looking into phasing out the 40 per cent inheritance tax rate, with plans possibly revealed in the upcoming Spring Budget in March.  

While this tax currently affects less than four per cent of the population, the increasing wealth of older individuals could see this percentage rise to over seven per cent by 2032-33. So, what would it mean for you if inheritance tax were to be eliminated? 

According to the Institute for Fiscal Studies, abolishing inheritance tax would result in the wealthiest one per cent of the population, those with estates worth at least £2.1 million, receiving an average tax cut of approximately £1.1 million. While this may be welcome news for those benefiting, it poses political challenges for Rishi Sunak. 

At a time when many are grappling with high inflation and public sector workers are protesting overpay and conditions, a tax cut for the wealthy could be met with scrutiny. A poll conducted by the Trades Union Congress (TUC) indicates that only 20 per cent of the public support a reduction in inheritance tax, while 60 per cent prefer it to remain as is or be increased. 

Paul Nowak, General Secretary of the TUC, stated, “Abolishing inheritance tax would be a significant tax cut for a very small, very wealthy minority and could cost the public purse £7 billion annually. It’s unsurprising that the majority of the public oppose lower inheritance tax thresholds and instead advocate for the wealthiest to pay their fair share.” 

David Sturrock, a Senior Research Economist at the IFS, highlighted the reasonable arguments for and against inheritance tax and emphasised the need to address issues within the current system as inheritances grow. He proposed abolishing the special treatment given to various assets, which could generate up to £4.5 billion in additional revenue. 

While the specifics of the Chancellor’s Budget in March are yet to be revealed, the discussions surrounding potential inheritance tax changes could signal the start of the next general election. Regardless of the outcome, our expert team is here to guide you through this complex system, ensuring you retain control over your assets for the future. 

For any inquiries regarding inheritance tax mitigation and estate planning, please reach out to our specialist team of experts. 

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