The Sunday Express quotes Julia Cox on the rumoured changes to inheritance tax gifting in the UK ahead of the Autumn Budget

UK Chancellor, Rachel Reeves, is reportedly exploring measures to increase revenue from inheritance tax by tightening gift rules.

The Guardian has reported the Treasury, ahead of the Autumn Budget, is considering tightening the rules surrounding the use of gifts of money to circumvent IHT.

Currently, cash gifts are exempt from tax as long as they are made more than seven years prior to the person’s death. Then, gifts made within three to seven years are taxed based on how close the recipient is to death.

The goal is to raise more revenue while keeping the Government's election promise not to raise income tax, National Insurance or VAT.

Julia Cox, Private Client Partner, comments for The Sunday Express:

This package of tax changes that the government seems to be considering introducing could represent the most significant tightening of personal tax rules in decades. The prospect of a lifetime cap on tax free gifts, coupled with introducing real time reporting and extending the taper period, would be a seismic shift.

"There is also the particular risk of further measures to prevent individuals from drawing down pensions early to gift funds ahead of the combined 67% inheritance and income tax rate due from April 2027. Such steps could close off what is currently a legitimate route.

"Whilst these changes might appear to offer easy revenue gains, inheritance tax is a sensitive topic and any reform risks public backlash. As with last Autumn, those considering making gifts or realising gains may wish to act now to fall under the current rules, rather than wait for potentially more restrictive measures in the Autumn Budget.

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