An ally of Andy Burnham has proposed a 'double death tax' that could leave middle-class families with a staggering £96,000 bill on inherited assets. The new Labour MP for Makerfield is set to become Prime Minister after Sir Keir Starmer's resignation, and all eyes are now on Mr Burnham's policies.
Proposal Details
Louise Haigh, a close ally of Mr Burnham and former Transport Secretary, recently argued in an essay that any review of the tax system should 'at a minimum' include reform of the capital gains tax uplift on death. This change would require bereaved families to pay capital gains tax on inherited assets that are currently exempt, significantly increasing the cost of passing on wealth.
Impact on Families
Adam Sedgwick, tax director at Forbes Dawson, told GB News: 'Removing the capital gains tax uplift on death may sound like a minor technical change, but for some families it could turn bereavement into a much bigger tax event.' He gave the example of a buy-to-let property purchased for £100,000 that had risen in value to £500,000 by the owner's death.
Under current rules, selling the property shortly after inheriting it would generally trigger no capital gains tax. But removing the uplift would leave the beneficiary with a taxable gain of £400,000, resulting in a capital gains tax bill of around £96,000 at the current 24 per cent rate.
Double Death Tax Warning
Mr Sedgwick warned the proposals could create a 'double death tax' if inheritance tax continues to apply alongside capital gains tax. 'If introduced without wider inheritance tax reform, it risks creating a double charge on death, with combined effective tax rates of well over 50 per cent in some cases,' he said.
'The current uplift is straightforward to understand and deal with. By removing it, a deceased's loved ones will be left having to hunt for old records,' he added. 'The biggest practical consequence may be liquidity problems. Beneficiaries could inherit valuable assets but have little cash to pay associated tax bills.'
Potential Responses
'Families may look more closely at creating trusts, making lifetime gifts or selling assets earlier, particularly if the gains would be sheltered under current rules,' Mr Sedgwick said. 'For now, most families should avoid making major estate-planning decisions based solely on reported proposals. The details remain uncertain, and any eventual legislation could include exemptions, reliefs or transitional arrangements.'
