Solicitors and estate planners may need to rethink ‘traditional’ estate planning , such as mirror wills or sole ownership of business assets, in view of the continued pressure on families as a result of the frozen inheritance tax (IHT) nil-rate bands.
The warning comes from Ian Dyall, head of estate planning at wealth management firm Evelyn Partners following the latest data from HM Revenue and Customs showing IHT receipts for April 2025 to August 2025 were £3.7 bn, £0.2 bn higher than the same period last year and an increase of 5.7%.
A long-standing freeze on the IHT nil-rate bands spanning a period when asset prices have risen have contributed to more families being drawn into the IHT net, said Dyall:
“This is before the changes to IHT reliefs announced at the 2024 Budget have come into force – changes that are already reshaping estate planning.”
Chancellor Rachel Reeves has confirmed the Budget will be Wednesday 26 November 2025 and it is anticipated alongside the continued freeze on IHT bands and the inclusion of defined contribution pension pots in estates from April 2027, ‘further measures (could be) implemented to boost public finances through increasing the tax take upon death’ said Will Hale, CEO of Key Advice & Air
“Tax planning must not be the preserve of the high net worth. It is imperative that all families seek advice and, given that £3.7 trillion of property wealth sits in the hands of the over 55s, that this advice includes a consideration of all options for reducing the IHT liability – including modern later life lending solutions such as lifetime mortgages.”
The budget is shaping up to be a ‘delicate balancing act between political promises and fiscal necessity’ said Shaun Moore, tax and financial planning expert at Quilter.
“HMRC’s latest tax receipts… highlight the fiscal bind facing the government. Between April and August 2025, PAYE income tax and National Insurance contributions reached £197 bn, up £17.3 bn year-on-year. With thresholds still frozen, more workers are being pulled into higher bands and businesses continue to bear rising employer NICs. These measures have become the backbone of Treasury revenue, but the political reality is that Labour has ruled out increasing income tax, NICs or VAT for working people.
“That manifesto pledge leaves Rachel Reeves hemmed into a corner. With a £22bn fiscal hole to fill and the most obvious levers off the table, attention inevitably shifts to other taxes. Inheritance tax is already on the rise, with receipts totalling £3.7 billion so far this year – £0.2 billion higher than the same period in 2024. Frozen thresholds, high property values, and the scheduled inclusion of pensions in 2027 mean IHT is set to grow further, making it a tempting, if controversial, source of additional revenue.”
Dyall concludes the continued rise in IHT receipts is a ‘wake up call’ for house households ‘sleepwalking into substantial tax bills’ and for professionals looking to best advise them.
“… families should also remember that estate planning is not just about tax efficiency, it’s about ensuring that wealth is passed on in a way that meets the family’s objectives and avoids unnecessary financial stress for beneficiaries, while in some cases preserving business continuity.”
