By Intense Life Desires 
Rachel Reeves is thought to be taking another look at IHT and considering making more changes
The government is considering limiting the total value of one-off gifts that people can make during their lifetime under the potentially exempt transfer inheritance tax rules, according to reports.
Rachel Reeves is taking another look at IHT and considering making more changes. Treasury officials are looking into options for capping the amount of money that can be gifted without incurring IHT liabilities, according to a report from The Guardian.
According to research from Hargreaves Lansdown, the mention of further IHT changes is likely to be concerning for many financial adviser’s clients.
Research from the firm this time last year showed that among retired people, inheritance tax hikes were the tax-raising move they dreaded the most.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said that it is not surprising IHT is back under discussion, because it meets the government’s criteria of raising tax without taxing people more during their working lives.
She said: “The government is thought to be exploring the possibility of limiting the total value of one-off gifts that people can make during their lifetime under the ‘potentially exempt transfer’ rules. The fact that people have to be able to afford to give this money away, and that it usually doesn’t involve handing over the family home, is thought to be part of the attraction – because it avoids targeting those whose wealth is tied up in property.
“However, from a Treasury perspective, it would need to be balanced against the fact that, at the moment, these gifts allow for money to pass through the generations. It means younger family members can put it to work for them, buying homes and spending. These things bring in taxes, from stamp duty to VAT. They also feed more money into the economy and boost economic activity. There is a risk that a change in the rules would stymie this flow of cash, which could have an impact on growth.”
She added that the government might also explore scrapping the taper relief, potentially introducing a cliff edge to the system where currently the rate of tax paid gradually drops between three and seven years after the gift is given.