High net worths rejig estates as inheritance tax overhaul looms

Wednesday 24 september 2025 5:26 pm

Wealthy families are scrambling to restructure their estates ahead of a potential overhaul of inheritance tax (IHT) expected in the upcoming Autumn Statement. Experts predict Chancellor Jeremy Hunt may significantly reduce the IHT threshold or even abolish the tax altogether,prompting a flurry of activity among high net worth individuals.

Tax advisors report a surge in inquiries from clients looking to utilise existing allowances and exemptions before any changes come into effect. Popular strategies include making lifetime gifts, establishing trusts, and increasing charitable donations.

“There’s a real sense of urgency,” says Sarah Williams, a partner at wealth management firm Evelyn Partners.”Clients are keen to lock in the current rules before they possibly become less favourable. We’re seeing a meaningful increase in demand for IHT planning.”

The current IHT threshold stands at £325,000 per individual, with an additional £175,000 allowance for a main residence. Any estate value exceeding this threshold is taxed at 40 per cent.

Rumours of a cut to the threshold have been circulating for months, fuelled by calls from Conservative MPs for tax cuts to boost the economy and appease voters. abolishing IHT altogether has also been suggested as a way to simplify the tax system and encourage investment.

However, any changes to IHT are likely to be controversial. Critics argue that the tax is essential for funding public services and that reducing or abolishing it would disproportionately benefit the wealthiest in society.

Despite the uncertainty, financial advisors are urging clients to take proactive steps to review their estate planning arrangements. “Even if the changes aren’t as drastic as some predict, its always a good idea to ensure your affairs are in order,” adds Williams. “Proper planning can help minimise your IHT liability and ensure your assets are passed on to your loved ones efficiently.”

The Autumn Statement is expected to be delivered in November, and will provide clarity on the future of IHT. Untill then, wealthy families will continue to navigate the complex landscape of estate planning, bracing themselves for potential changes.

High-net-worths rejig estates as inheritance tax overhaul looms

City A.M. | February 29, 2024

Wealthy families are scrambling to restructure their estates ahead of a potential overhaul of inheritance tax (IHT) in the upcoming Budget, with experts predicting a flurry of activity in the coming weeks.

Rumours are swirling that Chancellor Jeremy Hunt may significantly reduce the IHT threshold or even abolish the tax altogether, leading high-net-worth individuals (HNWIs) to proactively adjust their affairs.

“There’s a real sense of urgency among our clients,” says James carter, a partner at wealth management firm, Evelyn Partners. “Many are accelerating estate planning measures, such as making lifetime gifts, to take advantage of the current rules before any changes are implemented.”

The current IHT threshold stands at £325,000 per individual, with a further £175,000 allowance for a main residence. Any estate value exceeding this threshold is taxed at 40 per cent.

Abolishing IHT, as some Conservative MPs have advocated for, would be a significant boon for wealthy families. Though, even a reduction in the threshold could trigger a wave of estate planning activity.

“We’re seeing increased demand for advice on trusts, life insurance policies, and other strategies designed to mitigate IHT liability,” explains Sarah Jones, a tax partner at law firm, Withers. “People are keen to understand how potential changes might affect them and to take steps to protect their wealth for future generations.”

The potential changes come at a time when IHT receipts have been steadily increasing, fuelled by rising property values and a growing number of individuals exceeding the threshold. In the financial year to date, IHT receipts have already reached £7.4bn,according to HM Revenue & Customs.

however, critics argue that IHT is a complex and unfair tax, which disproportionately affects those who have already paid income tax and capital gains tax throughout their lives.

The Chancellor’s decision on IHT is expected to be a key feature of the Budget on March 6th, and will be closely watched by HNWIs and their advisors.

“The next few weeks are crucial,” says Carter. “Anyone with significant wealth should seek professional advice to ensure their estate planning is up to date and aligned with their objectives.”

Inheritance Tax Changes Anticipated in Upcoming UK Budget

High-net-worth individuals are proactively adjusting their estate planning in anticipation of potential changes to inheritance tax (IHT) in the upcoming UK Budget. This move is driven by concerns that the Chancellor may increase IHT to address a significant £30 billion shortfall in the Treasury’s finances.

Rising Demand for Estate Planning Advice

Wealth managers, such as Rathbones, have reported a considerable increase in inquiries regarding inheritance-related advice as the summer.This surge indicates a growing anxiety among affluent clients about potential tax increases.

Understanding Inheritance Tax (IHT)

What is Inheritance tax?

Inheritance Tax is a tax levied on the value of a person’s estate when they die. An estate includes everything a person owns,such as property,possessions,and money. In the UK, IHT is typically only payable on estates worth more than a certain threshold.

Current IHT Thresholds (as of September 24, 2025)

• Nil Rate Band (NRB): £325,000 – This is the value of the estate that can be passed on tax-free.
• Residence Nil Rate Band (RNRB): £175,000 – This additional allowance is available if the property is passed on to direct descendants (children, grandchildren, etc.).The RNRB is phased out for estates worth over £2 million.
• Combined Threshold: For many, this means a combined threshold of £500,000.
• IHT Rate: 40% on the value of the estate above the threshold.

Why the Potential Changes?

The UK government faces a substantial fiscal challenge, with a £30 billion gap in its finances. Increasing IHT is seen as a potential revenue-raising measure. historically,IHT has been a relatively unpopular tax,making it a politically attractive target for adjustments. Changes could include:

• reducing the NRB and/or RNRB: Lowering these thresholds would bring more estates into the IHT net.
• Increasing the IHT Rate: Raising the 40% rate would increase the tax burden on larger estates.
• Abolishing existing Allowances: Removing allowances like the annual gift allowance could simplify the system but increase overall tax revenue.

Estate Planning Strategies Being Considered

In response to the anticipated changes, high-net-worth individuals are exploring various estate planning strategies, including:

• Lifetime Gifts: Making gifts during one’s lifetime can reduce the value of the estate subject to IHT. Gifts made more than seven years before death are generally exempt.
• Trusts: establishing trusts can help protect assets from IHT and provide for future generations.
• Pension Planning: Pensions often have favorable tax treatment, and can be used to reduce the IHT liability.
• Life Insurance: Taking out a life insurance policy can provide funds to cover IHT liabilities.

Key takeaways

• Demand for estate planning advice is rising due to concerns about potential IHT changes in the upcoming UK Budget.
• The government is facing a significant fiscal shortfall and may increase IHT to raise revenue.
• Individuals with substantial assets are proactively reviewing their estate planning strategies.
• Understanding current IHT thresholds and allowances is crucial for effective planning.

the upcoming Budget is expected to provide clarity on the government’s intentions regarding IHT. It is indeed essential for individuals with significant wealth to stay informed and seek professional advice to ensure their estate planning remains effective.

Publication Date: 2025/09/24 23:43:21