Among the many media predictions about the 2025 Autumn Budget are changes to inheritance tax (IHT) and lifetime giving
If these predictions come true, those potentially affected could include not only people planning to use lifetime gifts to mitigate IHT, but families who help younger generations onto the housing ladder or make other large gifts to loved ones.
Existing rules
The current situation with lifetime gifts is that:
- Gifts to spouses and civil partners are free from IHT
- But gifts to other relatives or friends are counted in your estate for IHT purposes if you die within seven years of making them.
Many people use this seven-year rule in their IHT planning, along with other allowances, including gifts:
- of up to £3,000 per tax year
- on special occasions such as birthdays or weddings (the allowances depend on the occasion and relationship)
- from ‘normal expenditure out of income’.
Rumoured changes
The rumours circulating about the Chancellor’s IHT plans include extending the seven-year rule to 10 years, placing a cap on total lifetime giving, or restricting relief on normal expenditure out of income’
These rumours may prove unfounded, but they do reinforce a wider point. If you want to help a relative with a big purchase or use lifetime gifts for IHT mitigation, do plan carefully in advance and take legal advice.
Otherwise, your generous gift could potentially land loved ones with an IHT shock.
Published 16 October 2025
