Here’s the key context from your excerpt, in plain terms:
Why now?
Reversals on winter fuel payments and welfare reform have left Chancellor Rachel Reeves facing a multi-billion-pound hole in the public finances, with NIESR predicting a £41.2 billion shortfall against her “stability rule” by 2029–30.
What’s being considered?
A possible cap on the value of lifetime gifts you can make before IHT kicks in.
Currently, gifts made more than 7 years before death are tax-free. Gifts between 3–7 years are taxed at a tapering rate.
The review looks at how people use asset transfers to minimise IHT.
Political pressure points:
Several Labour MPs, among them Lord Kinnock and Baroness Eluned Morgan, have voiced support for introducing a wealth tax.
Reeves hasn’t ruled it out, but she insists she won’t raise taxes for “working people.”
Treasury’s stance:
They’re focusing on economic growth as the main way to improve finances, pointing to planning reforms expected to boost GDP by £6.8 billion and cut borrowing by £3.4 billion.
If this moves forward, the main change people would notice is that giving away money or property earlier in life may no longer be such a reliable way to avoid inheritance tax.
If you want, I can break down exactly how the current 7-year IHT rule works and how a cap could change the numbers so it’s easier to see the practical impact.
