Thinking of gifting money or assets to loved ones? Lifetime gifts, known as Potentially Exempt Transfers (PETs), are a popular way to reduce future Inheritance Tax (IHT). Right now, if you survive for seven years after making a gift, it’s IHT-free (though you still need to watch for Capital Gains Tax).

But rumours around the November 2025 Budget suggest these rules could change. Here’s what you need to know.

Possible changes on the horizon:

While nothing is confirmed, the government is reportedly considering:

• Lifetime cap on gifts: a total limit before IHT kicks in.
• Tax charge on all PETs: gifts could face IHT from day one.
• Longer waiting period: the current 7-year rule could stretch to 10 years.
• No taper relief: if the donor dies within the new period, the full IHT rate may apply.
• Tighter reliefs for business or farm assets: current exemptions might be reduced or capped. 

Potential impact of the changes:

• More families could end up paying IHT.
• Gifts you thought were “safe” after seven years might no longer be exempt.
• Careful timing and accurate record-keeping will be even more important.

What to do now:

To stay ahead of any rule changes:

1. Review your plans – take stock of gifts already made.
2. Consider acting sooner – making gifts before the Budget may lock in current rules.
3. Keep detailed records – note dates, amounts and recipients of every gift.
4. Get professional advice – a tailored plan can help avoid unexpected tax.

Lifetime gifts remain a powerful way to reduce Inheritance Tax - for now. But if the Budget introduces new limits or longer timeframes, acting before November 2025 could protect your family’s inheritance and save tax.

Need guidance on inheritance tax planning or capital gains tax implications? Contact Towers & Gornall to review your estate plans and explore smart ways to pass on wealth before any new rules arrive.