Recent data showed that between April and December, IHT receipts brought in £6.3bn for the Government but there are worries Labour could look to increase this intake and make the tax more punitive this year.
“The trend accelerated in the run-up to the autumn Budget when there were strong rumours that the 7-year rule could be extended to 10-years, or even worse, abolished completely and replaced with an upfront gift tax or a lifetime gift allowance.”
Ian Cook, chartered financial planner at Quilter Cheviot, said: “Prior to Labour’s first budget there were rumours that the seven-year rule might be extended to 10 years and there continues to be a general sense of unease amongst people that there could be further reforms.
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Read MoreHe said this would be “especially problematic” given the UK’s wider retirement savings and housing crisis.
IHT is applied at a flat rate of 40 per cent on estates worth over £325,000, but the system includes many loopholes, meaning the effective rate is often much lower.
From April 2027 inherited pension pots will be subjected to IHT and farms will have to pay the tax for the first time.
Other allowances could mean a couple who are married or in a civil partnership could pass on a farm worth as much as £3m.
Mr Shah said he has been advising clients to bring forward any gifts they are planning.
Mr Cook added: “I am actively encouraging clients to make full use of existing allowances and consider gifting more strategically. Many people hesitate to gift during their lifetime, leaving their estates subject to significant IHT charges. If the tax rules do become more punitive, the cost of inaction could mean a larger portion of their wealth going to the Exchequer.”
Mr Cook said simplifying the IHT system would have been a welcome move, including removing outdated reliefs or introducing more consistent policies which “would ensure fairness and accessibility, while reducing the reliance on complex estate planning strategies”.
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