Andy Burnham inheritance tax plans could raise death duty to 50% and cost families £53,000 more

Andy Burnham is reportedly weighing up a rise in inheritance tax from 40 per cent to 50 per cent as part of a potential overhaul of the tax system should he become Prime Minister.

The Makerfield MP, who is widely expected to take office within a week, is said to be considering the move as one element of a broader package of reforms, according to the Mail on Sunday.

The Labour‑aligned Institute for Public Policy Research has previously advocated a 50 per cent rate through its Commission on Health, on which Mr Burnham served.

Mr Burnham has indicated there is “some room” within Labour’s manifesto for “movement on tax”, despite the party’s pledge not to raise National Insurance, income tax or VAT.

A higher rate would substantially increase bills for families already subject to inheritance tax. HM Revenue and Customs data shows estates currently liable to pay an average of £212,000.

At 50 per cent, that average would rise to roughly £265,000 — around £53,000 more.

Wealth manager Quilter has modelled the impact on larger estates. It estimates that households with assets worth £1.45million would see their bill increase from £180,000 to £225,000, an additional £45,000.

Shaun Moore, Quilter’s tax and financial planning expert, said the number of estates falling into the regime “is steadily increasing”.

The proposed rise could generate about £1.9billion a year for the Treasury.

Inheritance tax thresholds have been frozen since 2009, when the average UK property cost around £155,000.

With today’s average price closer to £290,000, far more estates now exceed the £325,000 nil‑rate band.

Between four and five per cent of estates currently pay inheritance tax, a proportion the Office for Budget Responsibility expects to reach seven per cent by the end of the decade.

Mr Moore said frozen thresholds and rising property values mean “more families are finding themselves unexpectedly exposed”.

The effect is most acute in London and the South East, where higher house prices push more estates above the limit.

A homeowner with a £350,000 property, £50,000 in savings and a £10,000 car would already have an estate valued at £410,000.

Alongside potential changes to inheritance tax, Mr Burnham’s advisers are reportedly examining measures aimed at easing pressures on lower earners.

These include possible tax cuts for low‑income households and policies to reduce everyday costs, such as lower energy bills and cheaper bus fares.

The discussions come as the Government faces mounting spending demands from welfare and defence.

Advisers are also said to be exploring a more radical restructuring of the tax system by merging income tax, capital gains tax, inheritance tax and National Insurance into a single levy covering all forms of income.

Other options reportedly under consideration include higher duties on tobacco, alcohol, processed foods and gambling.

The threshold for the mansion tax could also be reduced from £2million to £1.5million, potentially bringing around 150,000 additional properties into scope.