Budget 2024: Inheritance Tax warning as ‘tucked away’ detail could have ‘very serious’ consequences

Lord Craig Mackinlay has highlighted a “serious” consequence of Labour’s changes to Inheritance Tax, following Chancellor Rachel Reeves’s Budget announcement today.

Addressing the House of Commons this afternoon, Reeves announced three major changes to the tax for Britons.

Reeves confirmed that the freeze on tax thresholds until 2028 will be “extended for a further two years” until 2030.

The Chancellor also announced that inherited pensions will also be included in Inheritance Tax, and the Government will “reform agricultural and business relief from April 2026”.

Reeves told MPs: “I understand the strongly held desire to pass down savings to children and grandchildren, so I am taking a balanced approach in my package today.”

Reacting to the announcement, Lord Craig Mackinlay told GB News that Labour’s plan is “ill-conceived”, and warned of a “real seriousness” tucked away within the legislation.

Mackinlay explained: “On Inheritance Tax – tucked away in there is the real seriousness in my view. So you built up a business, you are now allowed to leave £1million value of business tax free to your heirs and successors – anything above that now will bear tax at 20 per cent.

“So you imagine you’ve got a high value business with no cash – where are you going to find this 20 per cent IHT from? Are you going to have to close up this business? Break it up?”

Noting the policy on agricultural property relief, Mackinlay also warned that the threshold is also a “very serious measure”.

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Launching further criticism onto Labour’s Budget announcement, Mackinlay hit out at the Government’s “tax on jobs” by imposing an increase on employer National Insurance contributions.

Slamming Reeves’s “pure wordsmithing” on the measure and their claim that it “doesn’t break their election manifesto pledge”, Mackinlay told GB News: “It’s pure wordsmithing to say that that doesn’t break the manifesto pledge.

“An employer has a certain budget for staffing, and now they’ve got to pay an increased amount of employer’s National insurance – this is a savage rise.

“Not only the 13.8 per cent up to 15, but reducing the threshold down to £5,000 from just over £9,000. What that means is if you’ve got an employee on £9,000, the employer has got to find £600 more just to keep that employee going.”

Issuing a stark warning to employers as a result of the increase, Mackinlay added: “What’s the employer going to do? Are they going to suffer lower profits? Probably.

“Are they going to perhaps look at his old staffing budget and say, well, I’m going to have to let one go? What does this really mean in real terms?

“It doesn’t just come out of thin air. This is a very serious measure.”