How to protect your cash from Labour: One quick and easy way to cut your inheritance tax bill
Rachel Reeves says she will bring inherited pensions into inheritance tax from …
GB News
Rachel Reeves has made three major changes to inheritance tax in Britain.
The Chancellor may not have gone after the main inheritance tax thresholds - extending the inheritance tax personal allowance until 2030.
Rachel Reeves has targeted pensions and farmers with inheritance tax changes
GB News
But this doesn't mean that you shouldn't plan ahead as the Chancellor will have another 3 Autumn Budgets and 3 Spring Statements to go through her tenure.
Reeves also announced that inherited pensions will now be included in inheritance tax and farmers have reacted with fury as she installed reform of agricultural and business relief from April 2026.
How to protect your cash from inheritance tax
One way to protect your assets if you want to pass wealth onto children and grandchildren is by gifting.
Currently, everyone has a £3,000 annual allowance for tax-free gifts to loved ones.
What's more interesting and something most people don't realise is that this allowance can be carried over for one tax year if unused, allowing you to gift up to £6,000 in a single year tax-free.
For gifts exceeding £3,000, there’s an additional rule: no inheritance tax is due as long as the giver lives for seven years after making the gift.
However, if they pass away within three years, the gift incurs a 40 per cent tax rate.
So it’s often wise to transfer wealth sooner rather than later to avoid future tax complications - as the Labour government could always change this later down the line.
Rob Morgan of wealth manager Charles Stanley said, “If you haven’t already, now might be an ideal time to review the current rules, determine who you wish to benefit from your assets, and assess any possible impact on you and your family.”
Gifting assets can help reduce inheritance tax liabilities by bringing the estate’s value under or closer to the tax-free threshold.
In the three months up to September, the Treasury collected a record £2.2bn in inheritance tax.
Currently, a 40% tax applies to estates over £325,000 or £500,000 if a property is passed on to children or grandchildren - which will remain in force.
Amount of inheritance tax you would face if you gift more than 3,000
Time between date the gift was made and date of death
0 to 3 years - 40% tax due
3 to 4 years - 32% tax due
4 to 5 years - 24% tax due
5-6 years - 8% tax due
7 years + 0% tax due
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