Inheritance tax changes eyed to fill £50bn gap

Chancellor Rachel Reeves weighs tighter inheritance tax rules to address a £50 billion gap in public finances ahead of the next Budget.

Rachel Reeves Seeks Inheritance Tax Changes to Fill £50bn Gap as Conservative Critics Attack Labour

Chancellor Rachel Reeves is weighing reforms to inheritance tax to help plug a £50 billion gap in the public finances before the next Budget. The proposals under discussion include a lifetime cap on gifts and tighter rules for wealth passed to heirs. The Guardian says ministers are also considering shifts in capital gains tax and a firmer link between reliefs and support for British business.

Labour faces criticism from the Conservative side, which calls the plan a politics of envy and a form of class warfare. Officials say any changes must be fair, avoid punishing savers, and align with growth goals. The plan comes as Labour's public support shows signs of strain in polling, and backbenchers push for wealth-focused options while farmers and pension pots are under scrutiny.

The inheritance tax debate reveals Labour's attempt to rebalance fiscal pressure through wealth instruments. If pushed too hard, the plan could alienate middle England voters who see savings and gifts as a way to pass on hard work. The challenge is to design a system that closes gaps without deterring investment or saving, especially when assets like houses have surged in value.

At stake is whether wealth taxes can be framed as fairness without triggering a broader backlash against growth policies. The government stresses growth, but public reaction will depend on how clearly the policy targets high net worth individuals and how the changes affect ordinary savers and pension holders. The political calculus is delicate, and the next budget cycle will test Labour's ability to balance competing demands.

Highlights

The budget debate is just beginning and the public will judge fairness against growth.