When Will Inheritance Tax Be Abolished? The Truth Behind the Headlines and What It Means for Your Estate

Belgravia Capital
May 31
4 min read

Inheritance tax (IHT) is one of the most politically debated taxes in the UK. For decades, calls to scrap it have surfaced from MPs, think tanks, business leaders, and members of the public who see it as unfair, overly complex, or even immoral. This naturally leads to the question:

“When will inheritance tax be abolished?”

The answer, for now, is clear:

Not any time soon.

At Belgravia Capital Wealth Management, we help families plan for inheritance tax based on what the law is, not what it might be.

While political rumours swirl, your estate needs a concrete strategy built around current rules, with flexibility for future change.

This article explores the political context, why abolition is unlikely under the current government, and what you should do today to protect your estate - whether or not IHT is ever repealed.

Where Did the Talk of Abolishing IHT Come From?

Inheritance tax abolition has long been a topic of debate. Here’s why:

The tax is widely unpopular - polls show over 60% of the public oppose it
It raises relatively little revenue - just under £8 billion a year, or about 1% of total government income
It disproportionately affects families in areas with high property prices, like London and the South East
Critics argue it amounts to double taxation, taxing income or assets already taxed during life

Various proposals have been floated to reform or abolish it, especially by:

Some Conservative MPs and donors
Think tanks such as the Institute of Economic Affairs
Campaigners advocating for a flat tax or wealth tax instead

But while political support for change has existed in theory, no government has abolished it in practice.

The Current Landscape: Will Inheritance Tax Be Abolished Under Labour?

As of 2025, the Labour government is firmly committed to keeping and reforming inheritance tax, not abolishing it.

In fact, they’ve already introduced new restrictions and caps via the 2024 Autumn Budget:

Business Property Relief and Agricultural Property Relief are now subject to a £1 million lifetime cap (from April 2026)
AIM share relief is being reduced from 100% to 50%
Unused pension pots will be included in the estate for IHT from 2027
The nil-rate bands are frozen until 2030, meaning more estates will be dragged into taxation by default

Labour’s position is clear: inheritance tax should be retained and tightened to promote fairness and fund public services.

So under this government, abolition is off the table.

Would a Future Government Abolish Inheritance Tax?

It’s possible, but far from guaranteed.

The Conservative Party has historically been more supportive of reducing or scrapping IHT, and there have been:

Leaked discussions in 2023 about scrapping IHT before the general election
Party conference speeches hinting at reform

However, several factors make full abolition unlikely:

The political optics of scrapping a tax seen as targeting the wealthy are difficult during a cost-of-living crisis
The Treasury would need to replace the £7–8 billion in lost revenue elsewhere
There is currently no electoral mandate or detailed replacement proposal

Most likely? A future reform, such as:

Raising the thresholds
Lowering the 40% rate
Replacing IHT with a lifetime receipts tax (where beneficiaries are taxed based on what they inherit)

But complete abolition in the near future is unlikely, especially under Labour.

What Happens If Inheritance Tax Is Abolished?

Even if IHT were abolished or replaced, it’s unlikely to be:

Retroactive (i.e. refunding taxes already paid)
Permanent (future governments could reintroduce it)
Comprehensive (some form of wealth or estate taxation would likely remain)

You could still be taxed via:

Capital gains on inherited assets
Wealth taxes
Lifetime gift taxes

The more likely outcome is a reformed system, not its disappearance.

Why Waiting for Abolition Is a Risky Strategy

We speak to many clients who say:

“Why plan for inheritance tax now if it might be abolished?”

The danger is:

You might die before reform happens
You miss the chance to use reliefs that are already being cut
You expose your family to an avoidable 40% tax bill
You lose control over who gets what and when

Even if IHT is abolished later, the value of good planning now is rarely wasted. At worst, your estate is more organised, tax-efficient, and protected. At best, you’ve saved your family hundreds of thousands in tax.

5 Inheritance Tax Planning Steps to Take Now - Regardless of Political Change

Use Current Allowances

The £325,000 nil-rate band and £175,000 residence nil-rate band are still in place
Plan around the £1 million joint allowance if married

Make Lifetime Gifts

Use the 7-year rule and gifting exemptions while they’re still valid
Gifts made now could be exempt by the time of death — or locked in under current law