Public demand grows to abolish IHT

A YouGov poll commissioned by Kingsley Napley has unveiled a significant shift in public sentiment towards Inheritance Tax (IHT), with 54% of the British public now advocating for its complete abolition. This figure marks an increase from 49% just a year ago, signalling a growing unrest regarding the current tax system as a remarkable 76% of respondents expressed opposition to any hike in the existing 40% rate. Additionally, 67% support raising the £325k threshold that triggers IHT, reflecting a slight rise from 64% in 2024.

Despite these clear preferences for reform, the poll also highlighted a troubling trend in estate planning awareness, as 76% of those surveyed have either not sought or actively chosen against taking professional advice to mitigate their potential IHT liabilities. This is particularly concerning given that more estates are now subject to IHT, which has drawn heightened scrutiny amidst the parlous state of public finances.

The findings emerge just weeks ahead of Rachel Reeves’ Autumn Budget, where she is anticipated to maintain current thresholds while potentially tweaking IHT exemptions. Speculation suggests the Chancellor may consider the introduction of a gift cap or amendments to tapering rules regarding gift allowances. James Ward, Partner and Head of Private Client at Kingsley Napley, notes that "inheritance tax is effectively this country’s wealth tax. It is only paid by 1 in 20 estates." He adds that the Chancellor may find it "tempting to squeeze more revenue out of these estates."

Despite growing public opposition, many individuals remain unaware of the benefits of estate planning. Ward remarks, “Only 5% of the general public have taken advice on mitigating any IHT that may be due on their estate.” He warns that the upcoming changes could ultimately backfire on the Treasury due to the current slowdown in the property market.

Kingsley Napley is urging individuals to reconsider their estate planning strategies ahead of the November Budget. Ward encourages the public to act promptly, stating, “There is still time to gift out of excess income, set-up trusts or benefit from potentially exempt transfers before these measures are blocked in future.” This call to action highlights the importance of timely financial planning in the face of possible legislative changes surrounding Inheritance Tax reform.