Andy Burnham, the newly elected MP for Makerfield and incoming Labour leader, has backed a proposal that could see inheritance tax rise from 40% to 50%, potentially adding £53,000 to the tax bill for households with estates worth £1.45 million. Wealth manager Quilter has modelled the impact, estimating that such estates would see their inheritance tax bill increase from £180,000 to £225,000, an additional £45,000. For estates currently paying an average of £212,000, the rate increase would push the average bill to roughly £265,000.
IPPR Proposal and Labour's Stance
The Labour-aligned Institute for Public Policy Research (IPPR) has previously advocated for a 50% rate through its Commission on Health. Burnham has indicated there is “some room” within Labour’s manifesto for “movement on tax,” suggesting the policy could gain traction under his leadership. Quilter’s tax and financial planning expert, Shaun Moore, noted that the number of estates falling into the inheritance tax regime “is steadily increasing” due to frozen thresholds and rising property values, meaning “more families are finding themselves unexpectedly exposed.”
Burnham's Leadership Transition
Burnham is set to replace Sir Keir Starmer as Labour leader on Friday and become prime minister next Monday. During an online hustings with the parliamentary Labour party (PLP), he urged MPs to unite behind his leadership. He vowed to create a “team and culture where everyone is valued, seen and listened to” and told MPs he wants to be “accountable, visible and accessible.” He emphasised that “the Labour movement is, and always has been, a broad church. Cabinet and appointments will reflect that, alongside contribution, experience and commitment.”
Impact on Families and Economy
HMRC data shows that estates currently liable pay an average of £212,000 in inheritance tax. At a 50% rate, that average would rise to approximately £265,000, representing a £53,000 increase per estate. Moore warned that the frozen thresholds and rising property values are exposing more families to the tax, making the proposed increase particularly burdensome for those with moderate wealth tied up in homes. The policy could generate significant additional revenue for the government, but critics argue it may penalise families who have seen their property values rise without a corresponding increase in liquid assets.
