The chancellor has said that she will not be making \u201ceasy choices\u201d<\/a> at the fiscal event on 26 November, after research by the Institute for Fiscal Studies (IFS) indicated she may need to find at least \u00a322bn to shore up the economy.<\/p>\n The Labour government has appeared less certain in recent weeks on its manifesto commitment <\/a>not to raise taxes on \u2018working people,\u2019 meaning no increase to the headline rate of income tax, national insurance, or VAT.<\/p>\n With these three largest revenue streams ruled out, the Treasury must now look at smaller tweaks to the tax system to raise the funds it needs. This was recently referred to as a \u201cscrabble bag\u201d by tax expert Dan Neidle to the cross-party Treasury Committee.<\/p>\n open image in gallery<\/p>\n Ms Reeves has said she remains committed to Labour\u2019s manifesto commitment not to raise taxes on \u2018working people,\u2019 (PA) (PA Wire)<\/p>\n Instead of this approach, the Tax Policy Associates founder recommended Ms Reeves \u201csteps back and thinks about ways that you could reform the tax system to be pro-growth\u201d, adding: \u201cWhich we have rarely seen in last few decades but now has become quite desperate.\u201d<\/p>\n Should the government hold firm on its commitment, one possible area the chancellor<\/a> may be looking at ahead of 26 November is the inheritance tax<\/a> system.<\/p>\n Both Ms Reeves and prime minister Sir Keir Starmer<\/a> have previously they want those with the \u201cbroadest shoulders\u201d to pay a fair share of tax<\/a>, with inheritance tax policy being one of the more obvious ways to achieve this.<\/p>\n How does inheritance tax work?<\/p>\n Inheritance tax is a levy applied to the estate of someone who has died, but only around four per cent of families end up paying it, as most estates fall below the \u00a3325,000 tax threshold.<\/p>\n Key to this exemption is that anything left to a spouse or civil partner is not subject to inheritance tax, regardless of the estate\u2019s value. So if a deceased individual leaves their entire estate to their partner, even if valued at \u00a310m, no inheritance tax will be charged.<\/p>\n However, this exemption does not extend to partners who live together but are not married or in a civil partnership.<\/p>\n Each individual has the \u00a3325,000 inheritance tax-free allowance. Estates valued below this threshold incur no tax, while those above it are taxed at 40 per cent on the excess.<\/p>\n What changes has Labour already made to IHT?<\/p>\n![\"Ms](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/11\/1474195a49d0ee8845b75c9f58140342Y29udGVudHNlYXJjaGFwaSwxNzYxMzQ0Mjc5-2.82008691.jpg\")
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