Inheritance Tax – What Could the Chancellor Do?

Posted on 3 September 2025 in Tax, Trusts & Succession

The country is still reeling from the changes made to Inheritance Tax in the government’s last Autumn Budget, with fears now growing of further restrictions to come.

What Are the Rumours?

Recent media reports have suggested two potential changes in the government’s crosshairs, being:

1. A cap or allowance put on the amount which an individual is able to give away without an Inheritance Tax charge during their lifetime.

For further details, please see our recent insight: Inheritance Tax – Further Changes on the Horizon | Tozers

2. The restriction of the current ‘uplift’ for Capital Gains Tax purposes when someone passes away.

At present, if someone dies while holding assets which stand at a gain, this is essentially wiped clean before passing to the beneficiaries. But could this change, with possible Inheritance Tax and Capital Gains Tax on the same items?

Whilst no firm proposals have yet been announced, the direction of Inheritance Tax (IHT) reform can often be traced by looking back at previous reviews and policy papers. Several common themes emerge from the Office of Tax Simplification (OTS), the Resolution Foundation, and cross-party parliamentary group reports – and these give an indication of what could lie ahead.

Key Themes From These Reports

The OTS reports in 2018 and 2019 centred on simplification. They recommended, among other things, replacing the patchwork of lifetime gift exemptions with a single annual allowance, reducing the seven-year period for gifts to five, and abolishing taper relief. A key proposal was scrapping the capital gains tax (CGT) uplift on death, so that beneficiaries would acquire assets at the deceased’s historic base cost. The reports also highlighted the need to align business property relief (BPR) rules more closely with capital gains tax, referencing the stricter 80% trading activity test used for CGT.

The Resolution Foundation argued for more fundamental change: a lifetime receipts tax giving each individual a £125,000 allowance, with gifts above that taxed immediately at 20–30%. They also recommended capping agricultural property relief (APR) and BPR, at the time suggesting £5 million. That figure is now less speculative, with the Government having already legislated for a £1 million cap on APR and BPR from April 2026.

The same report also pressed for pensions to come into the scope of IHT, which is now a change already scheduled for April 2027, when certain pension pots will for the first time be subject to the tax. Interestingly, they also suggested the abolition of the Capital Gains Tax uplift on death.

The All-Party Parliamentary Group went further still in 2020, proposing a flat-rate wealth tax with only limited exemptions. This change sounds politically unlikely, but calls have been made for the move and it underlines the appetite for a broader overhaul of these piecemeal taxes.

What Might Happen Next?

Rumours can never be definite, but it is interesting to see how the reported changes do align with the recommendations made in previous reports. Across these sources, three recurring proposals stand out:

Ending the CGT uplift on death, so that beneficiaries could potentially pay Capital Gains Tax depending on the deceased’s purchase cost, when the beneficiary comes to sell (or perhaps otherwise).
Reforming lifetime giving, with simpler allowances, an overall lifetime giving cap and potential immediate charges on excess gifts.
Tightening reliefs, with the APR/BPR cap now a reality and further restrictions on eligibility possible.

The Impact for Our Clients

While the wholesale replacement of IHT with a wealth tax seems improbable, the clear trend is towards fewer reliefs and tighter allowances. Clients considering succession planning or lifetime gifts should review their arrangements accordingly.

How We Can Help

At Tozers, we closely monitor developments in IHT legislation and policy to ensure our clients are prepared for changes when they are announced. Whether you are considering making lifetime gifts, reviewing your business or agricultural assets, or planning the succession of your estate, our team can provide tailored advice to safeguard your position. We can help you understand how upcoming reforms may affect you, identify opportunities to plan effectively, and give you peace of mind that your arrangements remain fit for the future.

Contact our legal experts

Gráinne Staunton

Posted by
Gráinne Staunton
Partner & Solicitor / Head of Private Wealth

Recent cases

Wills and Succession Advice

Gráinne was instructed to review a high-value portfolio of land and business assets for a parks client, including leisure and renewable energy interests. She created flexible Wills designed to reflect recent family changes and accommodate future business developments.

Inheritance Tax & Succession Advice

Gráinne advised on inheritance tax and succession planning for a high-value park business, including potential tax reliefs across multiple assets and assistance with complex business valuations.

Significant Inheritance Tax Savings

Naomi recently advised on the administration of an estate left in trust involving over 70 charity and non-charity beneficiaries. Through strategic trust appointments, Naomi secured the reduced charitable IHT rate at 36%, resulting in a substantial tax saving exceeding £230,000 for the beneficiaries.

Agricultural Property Relief

Dealing with complex claims for Agricultural Property Relief, including on estates with multiple farmhouses, which require an ability to delve deeply into the technical detail of the law to support the claim.

Business Property Relief

Achieving successful claims for Business Property Relief in estates, resulting in a reduction of Inheritance Tax on one estate by nearly seven figures.

Unpicked Complex Trust Provisions

Advising on the technical detail of an unusual trust deed which involved deep research into the terms used by the settlor and their impact on trustees’ powers and duties.

Estate Administration and Tax Planning

Successfully administered an estate involving Business Property Relief and Agricultural Property Relief claims for a holiday park owner. Despite complex issues, including lifetime gifts and associated company activities, the Inland Revenue accepted the claims, ensuring the family business continued without tax burdens.

Estate Administration

Management of a complex estate worth over £2M, addressing investment portfolios and foreign tax issues. Rachael and the team identified a missed £130,000 tax saving and meticulously corrected previous steps, ensuring a successful resolution.

Estate Planning

Advised a non-domiciled client with £3.5M in cross-border assets on UK residency, inheritance tax, and succession planning. She provided tailored strategies, navigating complex tax changes and delivering timely, detailed advice for transferring assets.

Interpreting Unusual Trust Provisions

Advising on the technical detail of a trustees’ powers and duties on the wording of an unusual trust deed.

What our clients say

"I am very impressed with the very efficient and professional service I have received from Mr Graeme Manfield over many years dealing with a family trust. Graeme is efficient and professional and he is a great ambassador for Tozers, Exeter. Thank you."

Richard

"My mother's estate was efficiently dealt with by Naomi who was helpful and very approachable. Any questions were dealt with in good time and without difficulty. The process has been professional and inspired confidence, without being impersonal. Professionalism with a human face!"

Mr James

"Sasha Brennan was extremely professional, efficient and friendly in helping my spouse and I draw up our Wills. I would highly recommend her and Tozers."

Emma

"I found everyone very friendly and helpful. I was made to feel very welcome. Sophie was so nice and made me feel at ease. Very pleased all round."

Myra

"Sue made creating our will straightforward and stress free. She was professional, clear, and patient, answering all our questions and helping us think through important details. The process was quick and efficient, and we now feel much more at ease. Highly recommend!"

Simon

"We'd been putting off the job of getting our wills sorted as it seemed a daunting task, but Rachael made it very easy. She was clear and supportive through the process, which turned out to be much simpler than we'd ever imagined!"

Yvette & Chris Elliot

"Service and advice were excellent and communication was very good at all stages. We would recommend Tozers to anyone who asks.”

"We approached Tozers to put in place wills, trusts and set up Powers of Attorney. The trusts put matters slightly outside the norm and several conversations were needed to ensure we would achieve what we wanted."

"Everything was incredibly well organised, efficient, and very professional. First rate service all round."

"We were well informed and well supported throughout the whole process of re-writing our wills and organising Power of Attorney."

Inheritance Tax – What Could the Chancellor Do?

What Are the Rumours?

Key Themes From These Reports

What Might Happen Next?

The Impact for Our Clients

How We Can Help

Recent cases

Wills and Succession Advice

Inheritance Tax & Succession Advice

Significant Inheritance Tax Savings

Agricultural Property Relief

Business Property Relief

Unpicked Complex Trust Provisions

Estate Administration and Tax Planning

Estate Administration

Estate Planning

Interpreting Unusual Trust Provisions

What our clients say

Latest insights