Labour may have undisclosed plans to increase Inheritance Tax (IHT), which could result in higher tax burdens for UK families with significant assets. Juan Serey, Senior Advisor at Secure Mortgages and Protection, warns that with Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves addressing a £20 billion deficit, tax hikes are likely.
Serey comments: “The government is preparing the public for the autumn budget, which may include tax increases.”
He notes that Rachel Reeves has not ruled out hikes in capital gains tax and anticipates changes in inheritance tax policies as well.
Possible alterations might remove current allowances that let parents and grandparents pass on up to £1 million tax-free. This could lead to substantial tax bills for many families, potentially forcing them to sell homes or liquidate assets.
Serey points out that IHT is increasingly impacting middle-class families, not just the ultra-wealthy, as frozen tax thresholds and a 40% rate pull more families into the tax net. With 40% of homes in England and Wales now exceeding the basic allowance, the risk is immediate.
Given Labour’s pledge to avoid increasing major taxes like income tax and VAT, IHT seems a likely target to address funding gaps for essential services. Serey warns that higher IHT rates might discourage savings and investments, affecting families across the country.
IHT is often viewed as double taxation, levied on assets already taxed. Whole life insurance policies offer a way to manage IHT liabilities, providing a payout upon death to cover IHT bills and protect your estate.
Serey advises families to act now to secure lower premiums and consult financial protection advisors to safeguard their legacy against potential IHT increases from the new Labour government.
