UK households are being warned that Rachel Reeves could be about to change Inheritance Tax rules in the upcoming Autumn Budget next month to make an ‘unwelcome hat trick’.

Financial experts across the industry are bracing for the impact of further changes to Inheritance Tax, following the Chancellor’s admission that tax changes are under consideration for the government’s financial plans, set to be announced on November 26.

One controversial change that experts say is under consideration includes tweaking the rules which allow people to legally avoid Inheritance Tax.

One change includes the setting of a ‘lifetime cap’ on gifting to avoid Inheritance Tax, say experts at Hargreaves Lansdown.

Currently, with careful planning you can avoid some Inheritance Tax by making gifts to people seven years or more before you die, and experts at AJ Bell says another lever Ms Reeves could pull is to extend this timeframe further.

Hargreaves Lansdown’s Head of Personal Finance Sarah Coles and Head of Retirement Helen Morrissey warned that households should not rush to make changes before the plans are announced, though.

They said: “There’s been suggestions the government might set some sort of lifetime cap on gifts under inheritance tax rules, or remove the taper relief on large lump sum gifts.

“It’s important not to rush into any decisions, or allow the tax to force you into decisions you wouldn’t otherwise take.

“If you’re worried about change and unsure of the best approach – or how much you can afford to give away – this is one of the times in life where getting financial advice can offer real peace of mind.

“In any case it’s worth considering the most sensible way to take advantage of this potential window of opportunity before it closes.”

AJ Bell’s Director of Public Policy Tom Selby says: “The government has already announced inheritance tax (IHT) raids on farmers and pensions, so another attack at the Budget would represent an unwelcome hat-trick for anyone prioritising passing wealth onto their loved ones when they die.

“The fiscal situation the chancellor finds herself in is precarious to say the least, with some estimates suggesting she needs to find £50 billion to get the nation’s finances back in line with her ‘iron clad’ fiscal rules.

“Having ruled out changes to employee income tax, National Insurance and VAT, IHT is viewed as one of the few revenue-raising levers available that wouldn’t undermine economic growth or spark a backlash from public sector workers.

“If Reeves wants to target inheritances again, the simplest way to do this would be to either reduce IHT thresholds or extend the ‘seven-year rule’ that applies to lifetime gifts.

“Given the freezing of IHT thresholds will naturally raise more cash for the Exchequer over time through fiscal drag anyway, a shift in gifting rules might be a viewed as a politically more palatable option. But IHT remains one of the most hated taxes in Britain, so any move in this area will inevitably come at some political cost.”