As we get closer to Rachel Reeves’s second Autumn Budget – expected in late October or early November – there has been a lot of speculation in the press regarding potential changes to tax rules and rates to help plug the deficit in the UK finances.
One of the most recent rumours to have hit the headlines is that Rachel Reeves is potentially looking at further reforms to the IHT rules, and including a cap made on lifetime gifts by individuals. If this were to happen, it – coupled with the other IHT changes (restricting the availability of agricultural property relief (APR) and business property relief (BPR) from 6 April 2026, and changes to the IHT rules for pensions from 6 April 2027) – could have a significant impact. It would limit the IHT planning opportunities for individuals looking to mitigate their IHT position and pass on assets to the next generation.
At present, it is possible for UK taxpayers to gift cash/assets of any value to another individual without incurring an immediate tax charge (although there may be other taxes to consider where there is a non-cash gift). And, as long as the taxpayer survives their gift by 7 years, the amount given away is no longer part of their estate for IHT purposes. (There is tapering relief available if the individual dies between 3 and 7 years of the gift.)
Those looking to gift cash/assets to their children or grandchildren potentially only have months to act. Now is the opportunity to review and consider your overall IHT position and the potential options available to you.
So, with further changes possible in October or November, and given that the changes to the APR/BPR rules are only 6 months away, if you haven’t already done so it’s important to take stock. Now is the time to review your position and consider the impact that these changes will have on you, your family and/or your business(es).
If you’re looking to mitigate your IHT exposure but are unsure what steps to take next, please contact your usual contact at CT or personaltax@ct.me.
This content is based on our understanding of current taxation, legislation and HM Revenue and Customs practice, all of which are liable to change without notice. The impact of any taxation (and any tax reliefs) depends on individual circumstances.
