Chancellor Reeves Weighs Inheritance Tax Changes in Upcoming Budget

Reeves may shake up inheritance tax in the Budget. Public opinion is split, but receipts are rising as thresholds stay frozen.

, and ASMedia

2025 October 9 . 4:01 PM

1 min read

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Chancellor Reeves Weighs Inheritance Tax Changes in Upcoming Budget

Chancellor Rachel Reeves, previously of the Labour Party, is contemplating adjustments to inheritance tax in the upcoming Budget. Despite only 7% of households being subject to it, the tax is escalating yearly, with receipts up 5% to £3.7 billion so far this year. However, public sentiment is divided on the issue.

Currently, inheritance tax is levied by just 1 in 20 estates, effectively functioning as a wealth tax. The average net value of UK estates is £334,000, slightly surpassing the nil-rate band. Yet, only 5% of individuals have sought advice to safeguard their estates from this tax. Pensions, currently exempt, will be incorporated in calculations from 2027 under Labour's plans.

The public's stance on inheritance tax is varied. An overwhelming majority (77%) opposes an increase, and more than half (54%) advocate for its abolition. However, with receipts rising as thresholds remain static, Chancellor Reeves may explore further modifications in the Budget.

Inheritance tax, paid by a small minority of estates, is a contentious topic. As receipts rise and public opinion fluctuates, Chancellor Reeves is poised to consider changes in the upcoming Budget. The impact of these alterations on families and estates remains to be seen.