Peter Webb
Head of Tax

14th August 2025

Inheritance Tax (IHT) has long been one of the most debated areas of UK taxation, and it seems unlikely that it will change any time soon. With reports that Labour is exploring new ways to increase inheritance tax receipts, families and expatriates with UK connections should be paying close attention.

What Might Change

Currently, there’s no limit on what you can pass to your spouse, civil partner, or qualifying charities without paying inheritance tax. Political donations are also exempt.

Lifetime gifts made to anyone else usually fall outside of your estate if you survive seven years after making them, the familiar “seven-year rule.”

However, sources close to the government have suggested that Labour is considering a new approach: introducing a lifetime cap on tax-free gifts. This would mean that once you exceed a certain threshold, additional gifts could be subject to IHT immediately, rather than after seven years.

It’s a structure already seen in countries such as the United States, where taxpayers have a cumulative lifetime exemption rather than unlimited gifting.

Recent Inheritance Tax Reforms

The current government has already made notable changes:

• Abolishing IHT relief for pension funds
• Capping the relief available for farms and business assets

These moves indicate a clear direction of travel. Reforming inheritance tax remains a high priority as policymakers seek to close the nation’s estimated £50 billion budget shortfall ahead of the Autumn Budget.

For high-net-worth individuals and British expats with UK assets, that could mean more estates being drawn into the inheritance tax net.

What This Means for You

It’s never easy to predict future tax policy – especially during times of fiscal pressure. What is certain, however, is that the scope of UK inheritance tax continues to expand, and those with cross-border assets need to plan accordingly.

At Metis, we believe in proactive, flexible planning rather than reactive decision-making.
Our role is to help you:

• Build a succession and wealth management strategy that anticipates change
• Structure assets across jurisdictions and tax regimes to manage exposure
• Maintain flexibility to adapt quickly to new legislation
• Combine UK tax expertise with international planning for true peace of mind

By diversifying your wealth across different tax environments and planning early, you can protect your estate from unnecessary tax erosion, whatever political direction the UK takes next.

This is wealth. Built with Wisdom.

If you’d like to discuss UK tax, wealth management, or succession planning, our advisers are here to help

Please note this is a general guide and is not advice that can be relied on. It is important that you seek specific advice for your own circumstances. 

This material is intended for both Professional and Retail Clients, as defined by the Dubai Financial Services Authority. Metis Financial Planning Limited is regulated by the Dubai Financial Services Authority.