Inheritance Tax Raid Part I: What Rachel Reeves’ Lifetime Gift Crackdown Could Mean for Your Estate

If you’re planning to pass on wealth to loved ones, new signals from the Treasury suggest it’s time to take a closer look at your strategy.

Chancellor Rachel Reeves is reportedly considering a crackdown on lifetime gifts, which could reshape how inheritance tax (IHT) is applied in the UK. The move is part of a broader effort to close tax loopholes and increase revenue—but it could have serious implications for families hoping to reduce their IHT liability.

What’s Changing?

Currently, individuals can gift up to £3,000 per year tax-free, and larger gifts may escape IHT if the donor survives for seven years. But under proposed reforms, the government may:

• Shorten the seven-year rule or apply tax earlier

• Limit exemptions for gifts between family members

• Increase scrutiny on lifetime transfers and trusts

These changes could mean that more of your gifts are taxed, even if made years before death.

Why It Matters

In simple terms, Inheritance tax affects estates over £325,000, and with rising property values, more families are being pulled into the net. If lifetime gifts become harder to shield, it could:

• Reduce the effectiveness of estate planning

• Trigger unexpected tax bills for recipients

• Complicate financial planning for intergenerational wealth transfer

What You Can Do

Now is the time to review your estate plan and gifting strategy:

• Track all lifetime gifts and understand how they’re treated under current rules.

• Consider life insurance to cover potential IHT liabilities—many are using this as a buffer against future tax changes.

• Speak to a financial adviser to explore tax-efficient options like trusts, pensions, and gifting allowances.

• Stay informed—rules may change quickly, and proactive planning is key.

Don’t let tax changes catch your family off guard. Whether you’re gifting now or planning for the future, make sure your estate strategy is watertight. Talk to a financial planner today to protect your legacy and minimise the impact of inheritance tax.