Are Inheritance Tax Rules Changing? What You Need to Know in 2025

As one of the most discussed and debated aspects of estate planning in the UK, Inheritance Tax (IHT) frequently captures public and political attention.

With changes often floated during Budget announcements and General Elections, it’s no surprise many are asking: Are inheritance tax rules changing in 2025?

At Belgravia Capital Wealth Management, we specialise in helping individuals and families navigate the complexities of estate and tax planning.

In this post, we break down the latest updates, explain the current rules, and provide expert guidance to help you stay ahead of potential changes.

What is Inheritance Tax? A Quick Refresher

Inheritance Tax is a tax on the estate (the property, money, and possessions) of someone who has died. In the UK, the standard IHT rate is 40%, charged on the value of the estate above the nil-rate band, which is currently set at £325,000.

However, various exemptions and reliefs - such as the residence nil-rate band (RNRB) and spouse exemption - can significantly reduce the IHT liability.

Have the Inheritance Tax Rules Changed in 2025?

As of May 2025, there have been no confirmed structural changes to Inheritance Tax, but the landscape remains fluid.

The Chancellor’s most recent Budget did not announce a reform of the nil-rate band or a reduction in the 40% rate, but there is speculation that Inheritance Tax thresholds could be reviewed in the coming months — particularly if a new government is elected.

The nil-rate band remains frozen at £325,000 until at least April 2028, as confirmed in previous budgets.

Likewise, the residence nil-rate band remains at £175,000.

Key takeaways:

• No increase in the nil-rate band.- No change to the residence nil-rate band.

• Political pressure for reform is growing.

Why Might Inheritance Tax Rules Change?

Inheritance Tax has long been criticised for being overly complex and affecting middle-income families disproportionately due to rising property values, particularly in the South of England.

A few of the driving forces behind potential changes include:

• Political pressure: Some parties propose abolishing or significantly reducing IHT.

  
  

• Wealth redistribution: Others advocate for stricter rules to reduce wealth inequality.

  
  

• Economic need: The Treasury may review the IHT system as a source of revenue amidst wider fiscal challenges.

Commonly Proposed Changes to Inheritance Tax

1. Raising the Nil-Rate Band

Given that the £325,000 threshold has not risen since 2009, some experts and MPs are calling for an update to reflect property inflation.

2. Simplifying the System

The Office of Tax Simplification previously recommended streamlining exemptions and reliefs, such as gifts and agricultural property relief, to reduce administrative burden and increase fairness.

3. Scrapping IHT Entirely

This is more radical, but some policymakers and lobbying groups have floated the idea of eliminating IHT altogether, replacing it with capital gains tax on death instead.

4. Changes to Trust Taxation

Trusts have long been used to mitigate IHT. Potential rule changes could impact their effectiveness, particularly for discretionary and lifetime trusts.

What Should You Do Now?

Even if no immediate changes are confirmed, planning early is essential to protect your estate and reduce the risk of unnecessary taxation.

Key steps to consider:

• Use your annual gifting allowances.- Consider placing assets into trusts (with professional advice).

  
  

• Make full use of the nil-rate and residence nil-rate bands.- Review your will to ensure it's tax-efficient.

  
  

• Explore life insurance options written in trust to cover your IHT bill.

How Belgravia Capital Wealth Management can help with Inheritance Tax planning

We offer tailored inheritance tax planning services designed to:

• Minimise your estate’s exposure to IHT.

  
  

• Protect family wealth across generations.

  
  

• Ensure your estate is structured efficiently.

  
  

• Keep you up to date with legislative and regulatory changes.

  
  
  
  

  Whether you’re reviewing your will, planning for later life, or simply want peace of mind that your affairs are in order, we’re here to help.

So, are inheritance tax rules changing?

Not yet — but they might.

With political pressure mounting and economic conditions in flux, staying informed and prepared is essential.

Start your planning now to avoid being caught off guard by future changes.

Contact us today at contact@belgraviacapital.co.uk to book a personalised consultation and secure your estate for future generations.