Public opposes IHT increases, even among Labour voters

A recent YouGov poll commissioned by law firm Kingsley Napley shows strong public opposition to inheritance tax (IHT) increases, even as the UK government faces pressure to address a significant budget deficit. The poll, conducted ahead of Rachel Reeves’ anticipated October 30th budget, highlights that 64% of the British public supports raising the current £325,000 IHT threshold, while 69% oppose any increase to the 40% IHT rate.

The public's sentiment has remained consistent over the years, with 49% still in favor of abolishing IHT completely, despite a slight decrease from 55% in 2023. The polling data indicates broad-based opposition across party lines, with both Labour and Conservative voters resisting any increase to the IHT rate. Among Labour supporters, only 24% are in favor of the rate increase, with 58% against, while Conservative voters show even stronger opposition (82%).

Experts, including James Ward, Head of Private Client at Kingsley Napley, believe that while an increase in the IHT rate remains unlikely, Chancellor Reeves may focus on curbing existing exemptions to raise revenues. Speculation suggests potential changes like removing the capital gains tax (CGT) uplift on death or including pension pots within IHT calculations. Ward predicts these measures could raise up to £2 billion, far from the total £6 billion currently generated from IHT, which affects only 10% of UK estates.

With rising concerns about possible adjustments to the inheritance tax framework, Ward urges those potentially impacted to take immediate steps to manage their estate effectively. He recommends strategies such as capital gifting, utilising business relief exemptions, and life insurance to mitigate future tax burdens.

In summary, despite the looming budget pressures, public resistance to increasing IHT persists, and experts advise that proactive estate planning is essential to avoid potential financial impacts from the upcoming budget changes.