YouGov poll shows public opposition to IHT increases remains strong even amongst Labour voters in 2024 election

Expect exemptions to be targeted in October Budget says Kingsley Napley, so estate planning is crucial

A YouGov poll* commissioned by law firm Kingsley Napley shows a majority of the British public (64%) favour raising the £325k threshold at which IHT must be paid and there continues to be strong opposition (69% of the public) to increasing the current 40% rate at which IHT is levied.

The research comes just weeks ahead of Rachel Reeves’ first Budget as Chancellor when it is widely expected she will raise taxes to help plug an alleged £22bn ‘black hole’ in public finances. She has repeatedly refused to rule out forthcoming IHT changes.

Apart from a fall in the number of those wanting the complete abolition of IHT, Kingsley Napley’s figures suggest there has been relatively little shift in public sentiment on inheritance tax.

The poll results are shown in the table below, alongside comparison figures from when the same questions were asked in September 2023 and October 2022 (NB rounding has been applied):

The breakdown of responses by political party alignment was as follows (with 2024 figures based on how people voted in this year’s election and earlier data based on 2019 election voting behaviour):

(NB Following the 2024 General Election, the opinions of Reform voters have also been provided for the first time, and perhaps unsurprisingly 69% of them supported scrapping IHT, 74% supported raising the £325k threshold and only 8% support increasing the current 40% rate).

James Ward, Partner and Head of Private Client at Kingsley Napley, says: “Speculation is rife that Rachel Reeves will introduce changes to the IHT regime on 30th October. However, I think the steps she will take will be more detailed than just simply altering the nil rate band or the tax levy rate.

“She could look at removing the CGT uplift on death, for example, where there is currently a zero charge to Inheritance Tax, to remove the excess income exemption or to bring pension pots into estates for IHT purposes. She may target AIM shares and some agricultural reliefs. There have also been reports of her looking to remove the residence nil rate band exemption.

“Although an increase in VAT or income tax would do far more to help plug the ‘black hole’, her manifesto has prevented her going down that route, so curbing exemptions around Inheritance Tax is one of the few options open to her. If she does incorporate suggestions such as these, she could yield up to £2bn in revenue according to IFS** estimates.”

“And whilst increasing IHT overall remains unpopular across all voters and age groups, she could potentially justify changes that target wealth passing between generations on fairness grounds.”

The breakdown of responses to the Kingsley Napley / YouGov poll by age profile is shown below.

James Ward, Partner and Head of Private Client at Kingsley Napley, adds: “Of course, the reality is that IHT is paid by less than 10% of UK estates, mostly in London and the South-East, delivering a total £6bn in revenues. However, an increase of £2bn by selective measures is not to be sneezed at. Those who may be impacted should act fast to take prudent estate planning steps ahead of 30th October.”

Steps often recommended to reduce inheritance tax liabilities include:

• Capital gifting: Sizeable transfers seven years before death where you can take advantage of taper relief after 3 years;
• Paying for grandchildren’s school fees, putting aside a lump is better than drip feeding;
• Regular excess income gifting;
• Exemptions: Using business relief in particular can lead to big savings;
• Life insurance: Arranging for this to be paid out to family members (insurance pays the tax);
• SKIing: Spending the Kids Inheritance.