Wealthy Britons gift more money over inheritance tax fears

Affluent Britons are increasingly gifting money to family members amid concerns that Rachel Reeves may introduce stricter inheritance tax (IHT) policies. Wealth managers report a rise in gifting and tax planning since the October Budget, which included plans to tax pensions and agricultural land under IHT. Analysts fear Reeves may further expand IHT to raise government revenue, prompting individuals to take advantage of the current seven-year rule, which exempts gifts from IHT if the giver survives for seven years.

Recent government changes mean unused pensions will be subject to a 40% IHT rate from 2027, while agricultural land above a certain value will face a 20% levy from 2026. These reforms have fueled more strategic gifting among the wealthy to mitigate future tax burdens. Despite growing IHT receipts, Reeves’ commitment not to increase income tax, national insurance, or VAT has left limited options for revenue generation, heightening concerns about further tax increases.

For more information see Emma Dunkley and Emma Agyemang “Wealthy Britons gift more money over inheritance tax fears” The Financial Times, January 25, 2025. 

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.