Will Inheritance Tax Go Down? Why You Shouldn’t Wait for Cuts to Plan Your Estate

Belgravia Capital
May 31
5 min read

Every year, speculation swirls about whether inheritance tax (IHT) might be reduced.

Whether in the run-up to a general election, during Budget season, or after a leadership change, the question regularly resurfaces:

“Will inheritance tax go down?”

With a new Labour government in power and recent reforms introduced in the 2024 Autumn Budget, this question is more relevant than ever.

However, for most UK families, the reality is clear:

Inheritance tax is far more likely to rise,or be tightened, than cut.

At Belgravia Capital Wealth Management, we’ve seen too many families delay planning while waiting for political changes that never arrive.

In this post, we’ll explore why inheritance tax is unlikely to be reduced anytime soon, what’s already changed, and how to protect your wealth using the rules available right now.

Why Is Inheritance Tax So Controversial?

Inheritance tax has long been regarded as one of the UK’s most unpopular levies.

Critics argue it penalises families for building wealth, particularly through home ownership.

Yet the tax only applies to estates valued above:

£325,000 nil-rate band
£175,000 residence nil-rate band (if a home is left to direct descendants)
£1 million tax-free allowance for married couples or civil partners (with full band utilisation)

Despite its narrow application (around 4–6% of estates), IHT is seen as unfair, overly complex, and easy to sidestep for those with the right advice.

So why wouldn’t it be reduced?

5 Reasons Inheritance Tax Is Unlikely to Be Cut

Rising Revenue for the Treasury

IHT generated over £7.5 billion for HMRC in 2023-24, a record-breaking figure. As property prices and investment values grow while allowances remain frozen, IHT revenue is expected to continue rising.

With increasing demands on public finances, cutting this revenue stream would be politically and economically difficult.

Frozen Thresholds Increase Exposure

The main thresholds for IHT - the nil-rate band and residence nil-rate band - have been frozen until at least 2030.

In real terms, this is a stealth tax: as inflation rises, more estates fall into the taxable bracket.

The freeze alone is expected to generate billions more in the coming years without altering the 40% rate.

Recent Labour Reforms Point in the Opposite Direction

In the 2024 Autumn Budget, the new Labour government:

Reduced Business Relief on AIM shares
Capped Business and Agricultural Relief at £1 million per person
Extended the freeze on allowances
Introduced IHT on pension death benefits from 2027

These changes signal a shift toward increased inheritance taxation, not less. More changes may follow in the 2025 Budget.

Public Sentiment Is Divided

While many dislike IHT, the idea of cutting it can be seen as a policy favouring the wealthy. Surveys often show mixed opinions, with many voters supporting reform or simplification, but not necessarily rate reductions.

Past Promises Haven’t Materialised

In 2019 and 2023, Conservative leaders floated plans to abolish or reduce IHT. Neither happened.

In fact, the last major reform was the introduction of the residence nil-rate band in 2017, and since then, most changes have increased IHT liabilities.

Could Inheritance Tax Go Down in the Future?

While not impossible, it’s highly unlikely in the short to medium term. The only plausible scenario where IHT might go down is if:

It’s replaced with another tax, like a lifetime receipts tax
A future government uses it as part of a broader reform package
There’s a windfall in government revenue from other sources

Even then, changes would likely be limited, targeted, or replaced by other taxes on wealth or capital.

Why Waiting for IHT Cuts Is a Risky Strategy

Many families delay planning in the hope that IHT will be scrapped or softened. This can result in:

Higher tax bills due to missed reliefs and allowances
Loss of planning opportunities (e.g. the 7-year gift rule)
Forced sales of homes or businesses to meet IHT liabilities
Lack of liquidity for beneficiaries

The longer you wait, the fewer tools you have at your disposal.

How to Reduce Inheritance Tax Without Waiting for Reform

Rather than gambling on political change, UK families should take action using legitimate, proven strategies:

Gifting

Make gifts now to start the 7-year clock
Use annual allowances and gifts from surplus income
Help younger generations while reducing your estate

Trust Planning

Trusts help manage how and when assets are passed on
Remove assets from your estate over time
Ideal for families with multiple generations or vulnerable beneficiaries

Business and Agricultural Relief

Qualifying assets may still attract up to 100% relief
Act now before further caps or reductions are introduced

Whole-of-Life Insurance

Insurance policies placed in trust provide funds to pay IHT
Prevents the need to sell property or illiquid assets
Useful where property-rich, cash-poor estates exist

Spouse and Nil-Rate Band Planning

Equalise ownership of assets between spouses
Make sure both nil-rate and residence nil-rate bands are fully used
Don’t assume your existing will is structured optimally

Case Study: The Missed Opportunity

Mr and Mrs Thomas had an estate worth £2.2 million, including two buy-to-let properties and a pension pot.

Their wills had not been updated since 2005, and no planning was done while they were both alive.

After Mr Thomas passed away in 2024, Mrs Thomas inherited everything tax-free.

But when she passed away in 2026, the estate exceeded their combined allowance by £1.2 million.

No gifts had been made. No trust. No insurance.

The result? An IHT bill of £480,000 that could have been avoided with basic planning.

What You Should Do Now to Mitigate IHT

The best inheritance tax planning isn’t based on hope, it’s based on today’s law. Here’s what to prioritise:

Review your will and estate plan
Evaluate your IHT exposure with up-to-date valuations
Explore gifting and trust strategies
Assess liquidity to cover any future tax liability
Involve your family in the discussion early

How Belgravia Capital Wealth Management Can Help you Negate Inheritance Tax

At Belgravia Capital, we help individuals and families take control of their estate with confidence. Our IHT services include:

Comprehensive IHT exposure analysis
Tailored gifting and trust strategies
Coordinated will reviews and updates
Life insurance planning for IHT cover
Business and property relief guidance
Annual reviews to keep your plan aligned with new laws

Our team works closely with your legal and financial advisors to ensure a joined-up, forward-thinking approach.

Conclusion: Will Inheritance Tax Go Down?

Probably not, and certainly not in the foreseeable future.

Rather than waiting for a tax cut that may never come, take control of your estate now. Use the current rules to your advantage while they’re still available.

With inflation, frozen thresholds, and policy tightening, the only way to reduce your family’s exposure is through action, not anticipation.