Rachel Reeves will cement her deep unpopularity and won’t be forgiven by the public if she tinkers inheritance tax allowances, warns the CEO of one of the world’s largest independent financial advisory organisations.
Nigel Green of deVere Group is weighing in on the growing speculation ahead of the UK Chancellor’s critical Budget on Wednesday.
“Altering the thresholds now would trigger a backlash unlike anything the Treasury has faced in years.
“Families across the UK are already stretched by frozen thresholds, rising asset values, and steadily increasing fiscal drag, and that any attempt to worsen the position would be a political and economic misjudgement of remarkable scale.
“Inheritance tax is already regarded as the most-hated tax in the country. People accept income tax. They accept VAT. They even tolerate capital gains tax. Yet they see inheritance tax as fundamentally unfair because it strikes after a lifetime of tax-paying. Reducing allowances would not simply annoy voters. It would infuriate them.”
The freeze on the £325,000 nil-rate band has remained in place since 2009, during which time house prices, investment portfolios, and business assets have risen at rates that far exceed any measure of wage growth.
Inflation has further eroded the real value of the allowance, pushing increasing numbers of ordinary families into a tax regime originally designed for the very wealthy.
The deVere CEO continues: “If the allowance had kept pace with inflation, it would be comfortably above £500,000. People know that.
“They see their parents’ homes worth more. They see their pensions worth more. They see the Treasury benefiting from a threshold that refuses to move. This is not a tax on the rich anymore. This is a tax on households who never imagined they would face it.”
Forecasts from the Office for Budget Responsibility show inheritance tax revenues climbing towards levels unthinkable a decade ago.
The Treasury collected just over £2 billion in 2009. Projections point toward receipts well above £14 billion by the end of the decade, driven not by rising rates but by a frozen system that draws more families in each year without public debate or accountability.
Nigel Green says: “This is stealth taxation at its most aggressive. The public understands it. Families see the impact growing every year.
“The idea that the Chancellor might tighten allowances when people can clearly see the scale of the drag would push trust in economic leadership to a new low.”
He argues that the economic consequences would be just as damaging as the political ones. Families rely on inheritances for deposits, debt reduction, education support, entrepreneurship, and long-term financial resilience. Shrinking the allowance would suppress household financial momentum at a time when growth relies heavily on private-sector spending and investment.
He goes on to add:: “Inheritance transfers are vital to economic circulation. They help younger generations build assets. They support small businesses. They reinforce household balance sheets. Cutting allowances would pull oxygen from the economy.”
He adds that international comparisons strengthen the case for retaining the current structure. Many advanced economies have raised thresholds or entirely abolished inheritance taxes in recognition of demographic change, rising asset valuations, and the competitiveness of global capital flows.
The UK risks positioning itself as an outlier at precisely the moment when it needs to retain and attract wealth, talent, and investment.
Retaining the current allowances is “not a political luxury”, it’s an economic imperative, says Nigel Green.
“Other countries are moving in the opposite direction because they recognise the long-term benefit of allowing families to pass on assets without punitive intervention. The UK cannot afford to drift backwards.”
He warns that reducing allowances now would deepen public frustration with fiscal policy and reinforce concerns about an erosion of personal financial autonomy.
The chief executive concludes: “If the allowances are cut, the public will not forget it.
“The resentment from the financial and economic negative fallout will endure for years.”
