The firm’s calculations suggest that abolishing the long-standing CGT uplift on death would leave beneficiaries paying tax on gains accumulated during a relative’s lifetime when they eventually sell an inherited property.

A family inheriting a home that has increased in value by £500,000 over 25 years could face a CGT bill of £119,280, assuming the current 24% CGT rate, Rathbones said.

The proposal has emerged as speculation continues over possible changes to CGT under an Andy Burnham government, with policymakers looking at ways to raise additional tax revenues.

Currently, inherited assets are generally rebased for CGT purposes when someone dies, meaning any gains built up during the deceased’s lifetime are wiped out. Removing that relief would mean beneficiaries inherit the original purchase price for tax purposes, significantly increasing the taxable gain when the asset is sold.

Rathbones estimates that inherited assets with lifetime gains of £150,000 would generate a CGT liability of £35,280, rising to £71,280 on gains of £300,000 and £119,280 on gains of £500,000.

Ed Wood, financial planning director at Rathbones, said the change could come as families are already preparing for inheritance tax reforms due to take effect next year.

“For many families, the removal of CGT uplift on death would feel like a one-two punch,” he said. “Not only could inherited wealth be subject to inheritance tax, but beneficiaries could also face a CGT bill on gains that accrued during their loved one’s lifetime.”

He added that the proposed reforms could also create practical difficulties for executors, who may need to trace decades-old purchase records, calculate the cost of historic improvements and establish original acquisition costs before estates can be settled.

The analysis comes as unused pension funds are due to be brought within the scope of inheritance tax from April 2027, prompting concerns among advisers that more intergenerational wealth could become subject to taxation.

Rathbones also examined the potential impact of aligning CGT rates with income tax rates, another reform that has been widely discussed.

Under such a move, additional-rate taxpayers could see the rate on capital gains rise from 24% to as much as 45%. On a taxable gain of £50,000 outside tax-efficient wrappers such as ISAs and pensions, the CGT bill would increase from £11,280 to £21,150, an additional £9,870.

Higher-rate taxpayers would also face significantly larger bills, with CGT on a £50,000 gain rising from £11,280 to £18,800 under the firm’s calculations.

Kirsty Cartwright, Investment Director at Rathbones, said while speculation over tax changes had prompted useful planning discussions, investors should avoid allowing tax considerations alone to dictate investment decisions.

“The key is not to let the tax tail wag the investment dog,” she said. “Whatever policy changes may come, making full use of available allowances and tax-efficient wrappers such as ISAs and pensions remains as important as ever.”

Current CGT rates are 18% for many basic-rate taxpayers and 24% for higher and additional-rate taxpayers, with a £3,000 annual exemption. No changes to the regime have been announced.