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Inheritance Tax Hikes Anticipated in Upcoming Budget

Vithanage Erandi Kawshalya Madhushani Jade Times Staff

V.E.K. Madhushani is a Jadetimes news reporter covering Political.

 
Inheritance Tax Hikes Anticipated in Upcoming Budget
Image Source : Vicki Young

Government Eyes Increased Revenue from Inheritance Tax as Budget Looms


The government is expected to raise additional revenue through changes to inheritance tax in the upcoming Budget, though specific details remain unclear. Various changes to exemptions and reliefs currently included in the tax are under consideration by Prime Minister Keir Starmer and Chancellor Rachel Reeves.

 

Inheritance tax is levied at 40% on the assets, property, and money of a deceased person, applied to estates valued above the £325,000 threshold. The tax currently generates approximately £7 billion annually, with only around 4% of deaths resulting in an inheritance tax charge.

 

A number of exemptions, including Business Relief and Agricultural Relief, help certain assets avoid taxation, while gifts given within seven years before death may also trigger an inheritance tax charge. Government sources indicate that the scope of these exemptions could be narrowed as part of the strategy to increase tax revenues.

 

The anticipated changes come as part of a broader effort to address a £40 billion gap between government spending ambitions and expected tax revenue. With Labour keen to differentiate itself from the previous Conservative government, this Budget is expected to focus on "Fixing the Foundations to Deliver Change."

 

Despite the party's manifesto pledge not to raise taxes on working people, ministers appear to be exploring the possibility of increasing National Insurance contributions for employers. Labour has emphasized that its tax-raising plans will target businesses and wealthier individuals rather than the general workforce, but the specifics remain a point of contention.

 

Shadow Chancellor Jeremy Hunt criticized the government for planning tax increases while avoiding transparency during the election campaign. He warned that many families who have worked hard to secure an inheritance for future generations could be affected by these changes.

 

With the Budget set for October 30, further details will soon emerge about how the government plans to balance its books while delivering on its promises to "reset the public finances" and invest in vital services.

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