HM Revenue & Customs (HMRC) data shows inheritance tax (IHT) revenue for April 2025 to March 2026 hit a record-breaking £8.5 billion.
Receipts for 2025-2026 surpassed the £8.2 billion recorded for the same period the previous year, marking the fifth consecutive increase as increasing property prices and the freezing of the nil-rate band combine to make more individuals liable for IHT.
The £200 million increase signifies a 2.4% year-on-year rise, with receipts in March totalling £755 million, up from £614 million in February 2025.
The nil-rate band is currently frozen at £325,000, with a further £175,000 for direct descendents.
Samantha Warner, legal director at Winckworth Sherwood, said: “IHT revenues continue to steadily rise due to the prolonged freeze on IHT thresholds. The nil-rate band and the residence nil-rate band have not been adjusted for inflation or rising property values, which means more estates are becoming liable for the tax as asset values increase.
“It remains a persistent and unavoidable inheritance tax planning issue, and one that should not be ignored.”
From 6 April next year unused pension and death benefits will be included in IHT calculations.
Mark Lambert, head of onshore bond distribution, Chesnara Life, said: “The continuing rise in IHT receipts highlights the growing complexity of estate planning for advisers and the need to access the widest range of solutions possible.
“Advisers and clients are already in the countdown to changes coming in from April 2027, when unused pension benefits will start to be included within estates for IHT purposes. Combined with the ongoing freeze to the IHT thresholds until 2031, this means many families are likely to face increased exposure over the coming years.”
Will Hale, CEO of Key Equity Release, said: “Yet another record for IHT receipts serves as a timely reminder for advisers and clients to expand their horizons on retirement income and estate planning strategies and look at all assets and particularly property wealth as part of the mix.
“Rising house prices have been a major factor in the increase in IHT receipts along with the ongoing freeze in IHT thresholds which has seen the nil rate band held at its April 2009 level and the resident nil rate band held at its April 2020 level until April 2030.”
He added: “Recent data published by Savills suggests that the over 60s hold property wealth totalling £3.84trn. For many the home is the largest asset in the personal balance sheet and it makes no sense for it to be excluded from considerations around funding needs and wants in later life – including efficient intergenerational wealth transfer. Particularly given the upcoming inclusion of unused defined contribution pension funds in estates from April next year, all advisers should be taking a fresh look at their planning approach – both from an accumulation and decumulation perspective.”
Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, said: “No surprises on the rise but as we have seen in recent months it does look like the rate of increase is slowing, and certainly this is less than previous annual rises in the IHT take. For years, IHT revenues have been boosted quite significantly as frozen nil‑rate bands steadily draw more estates and assets into the tax net as values increased.
“The backdrop now, however, is slightly altered: London house prices, which have historically acted as a big engine of IHT exposure, have cooled noticeably over recent years… Yet receipts are still rising, because with decades of wealth accumulation and many years of frozen allowances, even modest asset growth can inflate IHT bills, regardless of medium‑term property market movements.
“Meanwhile, an aging population means more estates, and more estates belonging to the asset-rich boomer generation, are being assessed as time goes by.”
2 responses
The continued rise in IHT receipts isn’t just a headline it’s a warning signal for families who haven’t yet put a clear estate planning strategy in place.
With the nil‑rate band frozen since 2009 and the residence nil‑rate band unchanged since 2020, more ordinary families are being pulled into the IHT net every year. Rising property values, decades of accumulated wealth, and the upcoming inclusion of unused pension benefits from April 2027 mean exposure is only heading in one direction.
What this data really shows is that IHT is no longer a tax on the wealthy it’s a tax on the unprepared.
A clear strategy matters because:
• Frozen allowances + rising asset values = silent tax creep
Even modest growth in property or investments can push estates over the threshold.
• Pensions will soon be part of the calculation
Many clients still assume pensions sit outside IHT. From 2027, that changes.
• Property wealth is now the biggest driver of liability
For most families, the home is the largest asset and often the least planned for.
• Intergenerational planning is becoming essential
Without early action, families risk losing significant value unnecessarily.
• Complexity is increasing, not decreasing
Trusts, gifting, pensions, life policies, and business structures all need to be coordinated, not treated in isolation.
The message is simple:
Doing nothing is now the most expensive option.
Clients who take advice early, understand their exposure, and build a structured plan whether through trusts, lifetime gifting, pension strategy, or wider asset protection are the ones who will protect more of their estate for the next generation.
In a landscape where thresholds are frozen until 2031 and receipts keep hitting record highs, a proactive IHT strategy isn’t a luxury. It’s a necessity for anyone serious about safeguarding their family’s legacy.
#Wills #Trusts #Inheritance
Missing from this debate is the question of unclaimed pension assets. If institutions are holding billions in dormant funds because beneficiaries have not been traced, how will those be treated for inheritance tax purposes? Taxed before families can access them, or only once recovered?
And should policy not also examine whether firms holding such assets should face greater obligations, or tax consequences, when there is so little incentive to return money to its rightful beneficiaries?