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Autumn Budget 2025: Inheritance Tax, Gifting and Trust Speculation

16 September 2025

The date for the Autumn Budget has been set for 26th November 2025 by HM Treasury amid the backdrop of economic lethargy and tight fiscal rules.

Despite a reported £40m increase in tax revenue projected as a result of the 2024 Autumn Budget, the current expectation is that further increases in HMRC’s tax receipts will be required from this year’s “red box” statement and, given the Government’s pledge not to increase Income Tax or VAT rates, Inheritance Tax (IHT) is rumoured to be a likely area of consideration once again.

In particular, the current rules on gifting may be under scrutiny, although it is important to stress that this is only speculation at this stage.

Current Rules

Currently, if a person gives away or puts into a Trust assets of any substantial value, including cash, and dies more than 7 years after making this gift, then the value of the gift will fall out of consideration when their Executors deal with how much their estate is worth and therefore how much IHT is due to HMRC.

If the same person were to have died between 3 and 7 years after making the gift, then tapering relief would be available for each completed year.

If the death occurred less than three years after the gift, the value of the gift would be added to the rest of the person’s estate and subject to tax, depending on the person’s own IHT reliefs, not least the Nil Rate Band allowance currently set at £325,000.

As such, with proper planning (and a reasonable dose of luck), lifetime gifting can be an effective method of reducing large estates for IHT purposes while also providing for the next generation.

Speculation

It has been suggested that the Chancellor may look to increase the length of this survival tether, e.g. from 7 to 10 years, or alternatively to introduce a lifetime cap on the amount a person can give away.

This has led to conjecture that now could be a good time if your finances allow to consider making gifts to loved ones, prior to any potential tightening in the rules.

However, causing yourself financial hardship during your lifetime purely to help your estate pay less tax when you die must be guarded against, as should wider implications associated with gifting.

Summary

If you are contemplating any such decisions, either through setting up a Trust to retain an element of control over the distribution, or straightforward gifting, then we would recommend seeking professional advice to work out what options may be right for you. Our friendly Trusts and Tax team would be happy to assist in this regard.