The changes could leave some people facing much bigger bills when inheriting property
Millions of families could face a major shake-up to the way they pass on wealth if reported capital gains tax reforms become reality.
The changes could leave some people facing much bigger bills when inheriting property and investments, with some families potentially forced to sell assets to cover the cost, a tax expert has warned.
Allies of incoming Prime Minister Andy Burnham are reportedly considering changes to the capital gains tax (CGT) uplift on death, which currently resets the value of inherited assets for tax purposes.
If the uplift were abolished, gains built up during the original owner's lifetime could become taxable when beneficiaries later sell inherited assets such as property.
Matthew Jones, Co-Founder and Precious Metals Analyst at Britannia Bullion, told GB News: "Some families could be forced to sell inherited assets if the changes go ahead."
He added: "The greatest concern is that families may no longer be able to make decisions based on what's best for them, but instead on what they need to sell in order to meet a tax liability."
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 CGT uplift on death.
The idea has also been backed for several years by think tanks including Tax Justice UK, Centre for the Analysis of Taxation (Centax) and Fairer Share.
Wes Streeting, who is seen as a possible future Chancellor, has also previously argued that capital gains tax rates should be brought closer to income tax rates.
Despite the reports, tax specialists have urged families not to rush into changing their estate plans while the proposals remain under consideration.
Mr Jones said: "I don't believe people should panic or make wholesale changes based on newspaper headlines alone. These are proposals, not legislation. However, I do think they should act as a wake-up call."
He emphasised that the tax environment has shifted considerably in recent years, with CGT tightened, dividend allowances cut, pension regulations modified, and ISA allowances facing greater scrutiny.
"Rather than waiting until changes become law, families should use this time to review their estate planning, understand what they own, how those assets are held, and what tax liabilities could arise under different scenarios," Mr Jones advised.
"Good planning is about giving yourself options before decisions are made for you."
The biggest practical consequence, he warned, is that some families could be forced to sell inherited assets to meet unexpected tax obligations.
"Some families could be forced to sell inherited assets if beneficiaries inherit assets that have risen substantially in value over many years," Mr Jones explained.
"And if the CGT uplift on death were removed, some families could find themselves facing a much larger tax bill than expected if they later decide to sell those assets."
Currently, CGT applies to second properties, shares outside ISAs, business assets and certain valuable personal items, though not primary residences or vehicles.
Basic-rate taxpayers face an 18 per cent charge while those in higher brackets pay 24 per cent.
The existing uplift mechanism resets an asset's value to its market price at the owner's death, meaning any appreciation during their lifetime escapes CGT entirely.
To illustrate: a property purchased for £100,000 in 1980 and valued at £200,000 upon the owner's death would currently generate no taxable gain on that £100,000 increase. Beneficiaries selling for £250,000 a year later would only pay CGT on the subsequent £50,000 rise.
Abolishing the uplift would transform this calculation entirely, with the full £100,000 gain becoming taxable. After applying the £3,000 annual CGT allowance, a higher-rate taxpayer would face a bill of £23,280 on a £97,000 gain.
Telegraph Money tax columnist Mike Warburton said: "We already have a death tax in the form of inheritance tax and I do not think we need another one. Executors already have a difficult job to do and we should not be making it any harder."
The spectre of "double taxation" looms large, as it remains uncertain whether a Burnham government would reform inheritance tax alongside these CGT changes.
Bereaved families could potentially face both levies on the same assets, with accountancy firm Begbies Chartered Accountants calculating this could result in an effective 62 per cent tax rate in certain circumstances.
Mr Jones highlighted the broader implications: "We've already seen how frozen tax thresholds quietly draw more people into higher taxation.
"If further changes are introduced, more middle-income families could find themselves affected by tax rules that were originally aimed at much wealthier households."
He added: "One unintended consequence is that families who have spent decades building assets may have fewer choices about how and when they pass that wealth to the next generation."