Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of changes to inheritance tax on social mobility.

The estates of all individuals benefit from a £325,000 nil-rate band for inheritance tax. The residence nil-rate band is a further £175,000 and is available to those passing on a qualifying residence on death to their direct descendants, such as children or grandchildren. This means qualifying estates can pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can pass on up to £1 million without an inheritance tax liability. This is because any unused nil-rate band or residence nil-rate band is transferable to a surviving spouse or civil partner.

The combination of nil-rate bands, exemptions, and reliefs means less than 10 per cent of estates across the UK are forecast to have an inheritance tax liability in 2029-30. However, inheritance tax still makes an important contribution to the public finances and it is now forecast to raise more than £14 billion in 2029-30 to help deliver public services. This includes over £2 billion more in 2029-30 from changes to the inheritance tax system announced at Autumn Budget 2024.