Rachel Reeves is set to unveil her first major budget as chancellor in just over four weeks’ time – and she’s signalled it could involve a painful mix of spending cuts, tax rises and increased borrowing.
While nothing is confirmed, there’s been speculation that Labour could target inheritance tax as a way of addressing shortfalls in the UK’s finances.
Official government figures show inheritance tax receipts for April to August reached £3.5bn – around £300m more than the same time last year.
Inheritance tax is a tax on the estate of someone who has died – including all property, possessions and money – and is only charged above the tax-free threshold of £325,000.
This threshold has been frozen by the chancellor until 2028.
So, with inflation boosting the value of people’s estates, more people are being dragged above the threshold.
The standard inheritance tax rate is 40%.
Finance experts at Arbuthnot Latham say while the increase in government tax receipts is partly due to frozen thresholds, they show “many families are failing to plan for inheritance tax”.
So what can be done to ensure families can keep their wealth?
Arbuthnot Latham says it’s important for families to have a “tax-efficient plan” that ensures their loved ones will “receive a more significant transfer of wealth”.
Working out how your assets and income can safeguard your lifestyle is “crucial”, it says – but it also notes that “spending and enjoying your wealth” -…
