Published: Monday, September 15, 2025 · 12:53 PM | Updated: Monday, September 15, 2025 · 12:53 PM
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As UK chancellor Rachel Reeves faces growing pressure over the state of the country’s public finances ahead of the autumn budget, it is rumoured that the Treasury has looked at even tighter rules around inheritance tax (IHT) to raise funds.
IHT, which has become known as Britain’s “most hated tax”, is paid on the someone’s estate after they’ve died if it is valued at more than £325,000.
Slowing economic growth and higher borrowing costs have put the UK’s public finances under further strain, sparking rumours that Reeves will need to announce further tax rises in the autumn budget on 26 November to raise more money to stick to her fiscal rules.
In its election campaign, the Labour party pledged not to raise taxes on “working people”, ruling out increases in national insurance, income tax and value-added tax (VAT).
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In last year’s autumn budget, Labour’s first in 14 years, Reeves announced £40bn worth of tax rises. This included increases in employer national insurance contributions and in capital gains tax (CGT) rates.
In terms of IHT, the Treasury announced that from April 2027, most unused pension funds and death benefits would be included in the value of a person’s estate. This means that they could be subject to IHT.
The Treasury also announced that from April 2026, it would restrict the IHT relief available on agricultural and business property.
Turning to this year’s autumn budget, the Guardian reported last month that the Treasury was mulling ways to raise more money from changes to IHT. This includes potentially introducing a lifetime cap on the amount of money or assets that individuals can gift.
The Treasury has also reportedly looked at changes to the taper relief rate on IHT. Currently, no tax is due on any gifts if a person lives for seven years after giving them. If a person dies within those seven years and there’s IHT due on the money or assets, then the amount of tax due depends on when this was gifted.
Money or assets gifted in the three years before death are taxed at 40% and are then taxed on a sliding scale up to seven years.
Do you think the rules on IHT should be further tightened in the autumn budget? Vote in the poll below.
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