Andy Burnham, the newly elected Labour MP for Makerfield and a frontrunner to become the next Prime Minister following Sir Keir Starmer’s recent resignation, is proposing a controversial overhaul of inheritance taxation that could hurt middle-class families significantly.
According to reports from The Telegraph, Burnham’s team is considering abolishing the capital gains tax (CGT) uplift on death. This change would alter how CGT is applied to inherited assets, potentially forcing beneficiaries to pay both inheritance tax and capital gains tax on the same property—a scenario critics are calling a “double death tax.”
Currently, inherited assets are revalued at their market value on the date of the owner’s death. This revaluation wipes out any capital gains made during the deceased’s lifetime. Beneficiaries are only liable to pay CGT on any gains made after the asset is inherited, typically when they decide to sell it.
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Burnham’s proposed reforms would eliminate this revaluation. Instead, beneficiaries would inherit the original purchase price, meaning any appreciation during the deceased’s ownership would be subject to CGT upon sale. For example, if a property was originally bought for £100,000 but sells later for £200,000, the £100,000 gain would be taxable after the annual £3,000 CGT allowance.
This could result in higher taxes for beneficiaries—basic-rate taxpayers would pay 18% on gains, while higher or additional rate taxpayers would face 24%. In practical terms, higher-rate taxpayers could end up £23,280 worse off due to these reforms.
Louise Haigh, a close ally of Burnham, has advocated for reviewing how the CGT uplift operates, stating that it should “at a minimum” be considered for reform.
However, critics warn that these changes could add complexity and financial strain. Mike Warburton, tax columnist for The Telegraph Money, expressed concern: “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.”
Similarly, Andrew Brooker from Begbies Chartered Accountants highlighted how such double taxation might discourage people from selling inherited assets. “Discouraging asset sales through very high tax rates doesn’t make a great deal of economic sense either as it gums up markets,” Brooker explained.
Olly Cheng of the wealth management firm Rathbones summarized the sentiment by observing that the reform proposals showed “plenty of style but little substance” from a personal finance perspective.
As Burnham positions himself as a potential future Prime Minister, his tax reform plans have ignited debate about the balance between fair taxation and economic practicality, particularly for middle-class families inheriting assets.